Imagine that your organization has 100 salespeople making $100,000, at an average annual turnover of 25 percent. Studies show that recruiting costs for top-level performers can be 125 percent of annual salary, from recruiting costs to benefits, training and downtime. You can quickly see that your 25 percent of turnover is costing $3.125 million annually. By reducing turnover by 5 percent, the company saves $625,000 in turnover costs alone.
But how can you achieve a lower turnover rate? First, by growing your pool of applicants to maximize qualified candidates for each position, and secondly by increasing the cultural fit with the applicant from the onset. Here’s a few tips how you can improve recruiting marketing to help lower turnover costs.
1. Create an Employee Value Proposition (EVP).
This is a statement of what your company offers employees – and not just salary and benefits. What is the appeal of working for your organization? What does your company offer that might not be apparent from your marketing collateral or website? How is your company different from others in the industry? How is your company appealing to top talent in the industry?
The Employee Value Proposition is a sort of a “social contract” where employers clearly define what they offer employees, and what employees can count on employers to provide. According to TalentSmoothie, having an Employee Value Proposition helps improve the commitment of new hires by up to 29% and reduces new hire compensation premiums by up to 50%.
2. Define Your Employer Brand.
The Employee Value Proposition is encompassed in a larger pictured called the Employer Brand. An employer brand helps to establish the employer as credible, relevant, and distinctive. Is your employer brand fun like Southwest Airlines, or serious like Charles Schwab? Is it a casual environment, or a professional one? Before attempting to establish an employer brand you need to have an understanding of what internal and external perceptions of the company are. Conduct surveys of newly onboarded employees, and of longer tenured employees.
If the employer brand defined is different from what’s perceived by employees, you need to develop a plan to reconcile the two. One of my previous employers was an enterprise software company, in the same space as IBM. Most people thought of the company as somewhat dated, a little stuffy, and very serious. We were able to use social media and blogs to show our employees, casually dressed, having fun, and working in open, well-lit spaces with standing desks, treadmill desks, and colorful, contemporary furniture. Within a year, we were awarded two employer brand awards and a “best place to work” award for showing our brand through various channels.
3. Refine your recruiting channels
We did some research into our cost to acquire, or what the average cost for each hire was, averaged across social media, job boards, recruiting agencies, college and other job fairs, and referrals and recruiter contacts. We discovered that low-knowledge channels – like job boards and social media – were often also lower-cost, but they produced worse results when it came to hires, about 300 applicants per hire. Mid-knowledge applicants – career fairs and university fairs – were about 90 applicants per hire. High-knowledge channels – contractor to permanent, recruiter sourced, and employee referral – were the most successful applicants, around 20 applicants per hire.
From this research, we found that higher-knowledge applicants, or those that had the most knowledge about the company, and those that had the most previous exposure to the company had the best success when seeking a job. Along the same lines, your company should consider how using higher-knowledge, higher-touch methods can help to improve the quality of applicants. Do you have an applicant referral bonus program? Do people know about it? Are employees trained on the employer brand and employee value proposition? If not, you may consider how to implement these elements to improve overall cultural fit of new hires, and decrease the cost of payroll to your bottom line.