Staff Turnover in the First 12 Months in Australia is Costing $3.8 Billion

turnoverStaff turnover is a substantial cost to every business, estimated to be at least a person’s annual salary and with the average being 2.5 times annual salary it is costly making mistakes and getting the wrong people.

Some recent research by Price Waterhouse Coopers (PWC) found Australia came last in a list of 11 developed countries when it came to staff leaving within 1 year at 23%. So nearly 1 in 4 new employee’s leaves their job before their first 12 months is up!

In the survey, it found the country with the lowest turnover is the Netherlands with a turnover rate at only 4% of new hires leaving within 12 months.

The cost of this turnover in Australia was estimated at $3.8 billion in lost productivity and $385 million in avoidable recruitment costs.

These figures are staggering and in today’s competitive and generally lower margin retail climate, can be a business killer.

So what are some of the reasons for this high turnover?

PWC partner and head of HR services, Jon Williams says “recruiters oversell the job and organisations and I don’t think the promises that are made are often delivered.” Australia’s relatively low unemployment rate at 6% also contributes.

Another key factor is while we are more likely to change employers, we are much less likely to change industries. Reasons for this include employers being narrow in their search, mainly focussing on employing people who have done the same job in the same industry. Jon Williams added “Australians organisations are 10 years behind the trend to employ people for capacity and fit rather than for experience.”

So what do the great organisations do to get new staff to stay?

Management professor Talya Bauer from Portland State University found three things made a big difference to new staff retention:

  • The clarity of the role – so new staff know exactly what is expected from them and what the role entails
  • Confidence in their ability to do the job – clear induction processes and a new employee training plan will go a long way to fixing this
  • The social acceptance they find in a workplace – ensuring that new staff get to know their work colleagues and are very quickly made to feel part of the team.

In our recruitment training we provide to our clients this is how we recommend you deal with the above challenges:

  • It is so important to develop a person specification – what type of person is best suited for the job and recruit this. We always say “Hire for attitude and train for skills”. Don’t look for the supposed easy fix by basing your employment decision on someone with previous experience because you think they will require less training and supervision. Hire the right person based on their attitude and personality – two things you can’t train!!

  • Always ensure at the end of the interview you tell the applicant the good things and the challenging things about the role – being open and honest avoids them starting and then realising the job wasn’t what they thought.

  • This is the easiest of the 3 issues to fix by ensuring new staff are made to feel welcome and not just left to find out for themselves – the sink or swim approach. Appointing a work buddy can help or at least someone who they can ask for guidance or even where the toilets are!! It is always quite daunting for most new staff in the first few weeks, the quicker we make them feel comfortable and part of the team, the quicker they will start to perform.

 At the Retail Solution we can provide advice, 1: 1 coaching/mentoring and training on how to select the best people, just let us know if you have any questions or would like our help.

Roger SimpsonRoger Simpson – CEO, The Retail Solution and Author of “The Retail Solution” With over 35 years’ industry experience, Roger Simpson is recognized as Australia’s #1 Authority on customer ROI in the retail industry and as a global expert on staff coaching, customer service and selling skills.