“I really want to do this, but I don’t think we can afford it.” When I hear this statement from clients who push back on the cost of our tools and professional development, it makes me want to scream out loud: YOU CAN’T AFFORD NOT TO!
I realize they clearly don’t understand exactly what is at risk. Talent optimization and creating a good human experience for your employees are the most important things you do—without employees you don’t have a business. When ignored, downplayed, or simply done wrong, there are significant consequences. In fact according to a study completed by Leadership IQ, “The financial cost of hiring failures, coupled with the opportunity cost of not hiring high performers, can be millions of dollars, even for small companies.”
The current job market is so competitive, and, thus candidates can be selective. If you are not investing in building and maintaining a workplace where people want to be and where they are developed and nurtured, you simply cannot compete. All the proof you need is in the data.
Here are just a few reasons you should be investing heavily in the human experience of your employees.
- If you don’t, it’s going to bite you in the ass financially. Period.
- 46% of new hires fail within 18 months. 89% of the time, it’s behavioral. -LeadershipIQ
- 40-60% of new hire managers fail. -HBR
- Turnover costs on average 30% of annual compensation. It can be much higher for senior executives, high paying, or sales roles. -US Department of Labor
Simply put, we hire people for what they know and fire them for who they are.
Yes, turnover is bad, but it might be worse if employees remain on staff while disgruntled or unhappy. In fact according to a Gallup poll, disengaged workers cost companies in the US between 450 billion and 550 billion each year. Yes, that says billion! Still think you “can’t afford it”?
Let’s keep going, shall we?
- Employees know which companies have great culture and which companies invest in people. You can likely identify companies that fit this description within your own community. There are those who have a waiting list of eager, exceptionally-qualified talent. And those who are constantly posting new job openings for the same position like an endless revolving door.
Millennials are the largest generation currently in the workforce, so paying special attention to their needs is key. Ask yourself this: how can you possibly win the war on talent when you don’t actually do the things that the talent wants?
- Happy employees, happy customers. Yes, this sounds overly simplified, but it’s the truth. The trickle-down effect that happy, fulfilled employees have on your customers is undeniable. Think you don’t have the time or money to dedicate to improving your people strategy? You’re clearly missing the point.
- Employees who love their job and care about your company protect your bottom line. Towers Watson found that companies with low engagement scores had an average operating margin just under 10%. Those with high/traditional engagement had a slightly higher margin at 14%. Companies with the highest “sustainable engagement” scores had an average one-year operating margin of 27%.
Maybe I’m just a numbers and a data person, but when I see these numbers, it scares the you know what out of me for the people who tell me, “I just don’t think we can afford to do this.” because the cold, hard truth is, you can’t afford not to.