Replacing lost talent is a challenge…to say the least. It costs employers and managers an extraordinary amount of time, resources, and energy when an employee jumps ship. We’re talking lost productivity, overworked remaining staff, lower overall morale, and lost knowledge – plus recruiting, interviewing, and training costs.
According to Hay Group senior principal Mark Royal, for a company with 10,000 employees, entry-level worker turnover costs could reach $17.3 million over the next five years. For each team member lost, replacement costs can ring up to 150% of the departing employee’s annual salary.
Employee turnover is, in fact, such a monumental problem that the Center for Law and Social Policy (CLASP) and Center for Economic and Policy Research (CEPR) have released a new turnover calculator to help employers fully realize and plan for the expenses.
Helping Employees Want to Stay
While it is important to be prepared for employee turnover, it is equally, if not more, important to find innovative ways to increase employee retention. Once we’ve done the job of assembling our top-notch crew, what can we do (aside from locking them in the conference room each night) to ensure they will stay?
Better yet, how can we create a corporate culture that encourages employees to want to stay?
One often-overlooked strategy for employee retention is directly related to the culture of a company’s budgetary process. Frankly stated – in most companies budgeting is viewed akin to taxes. Instead of seeing budgeting as a way to plan the execution of the organization’s strategy and justify the funding of critical projects, it’s considered a mechanical, “check-the-box and move-on” annual exercise that takes time away from “real work”.
At XLerant, we know from experience that the right kind of budgeting solution can actually help organizations engage employees (instead of frustrating them), building a more committed workforce by empowering them to take more ownership over the process. Royal names five critical factors, which we’ve listed below, that positively influence employee retention. At XLerant we couldn’t agree more with his perspective and have included his thoughts in our recent eBook on Employee Engagement as a Business Strategy.
Five Factors For Employee Retention
- Trust in the Company and Its Leaders
A 2014 study by Interaction Associates revealed several important actions leaders can take in order to build trust. Not surprisingly, all of these points directly relate to actions an organization can take to make its budget process more employee-friendly.
- Ask for input into decisions that affect employees.
- Give employees background information so they can understand why decisions are being made.
- Set workers up for success by providing them with learning opportunities and the resources they need.
- Admit mistakes.
- Don’t punish employees for raising issues or concerns they have.
- Career-Development Opportunities
By offering employees opportunities to expand their knowledge, gain expertise, and potentially move up within the organization, employers create a culture of motivation and commitment. Employees who are given more responsibility toward the budgeting process also need to be supported in skill development to help them become stronger contributors.
- A Fair Exchange of Rewards for Effort
We all want to be compensated fairly for the work we do. Giving team members more ownership over the budget process tends to create harder working, more dedicated employees. We are asking them to do more, so we may need to consider compensating them accordingly. Remember that if employees feel valued enough to stick around, we are saving all those turnover costs!
- The Degree to Which the Employee Is Given Authority and Independence
Many organizations employ “top-down” budgeting, where senior leadership controls all planning, decisions, and numbers. A more employee-centric approach is the practice of collaborative budgeting – in which the people who are impacted by a budget are actively involved in the budget creation process. A collaborative budgeting model requires employees to own their numbers and to take accountability for their decisions, leading to a stronger sense of connection and commitment to the organization.
- An Environment That Permits Success
The Greek philosopher Nikos Kazantzakis said, “In order to succeed, we must first believe that we can.”
To help employees “believe they can succeed” we must give them not only our trust but also the tools to make great things happen. XLerant’s purpose-built budgeting software is designed to support the needs of not only finance teams but also senior leadership, managers, and employees; understanding the importance of engaging employees with user-friendly tools that empower them to take collective ownership over the budgetary process, while providing finance teams with the controls necessary for keeping the numbers in line with leadership’s goals.
To find out more about creating a culture of collaborative budgeting within your organization and positively impacting employee retention, check out our eBook on Employee Engagement as a Business Strategy.
XLerant, Inc. helps organizations move towards a more employee-centric, empowered workplace with BudgetPak, a cloud-based budgeting solution. BudgetPak’s user-centered design and built-in intelligence pave the way for engagement and empowerment by giving employees the tools for flexible and reliable budgeting, forecasting, and reporting. This user-friendly solution does more than make the process easier – it provides a platform for communication of the organization’s annual objectives and ensures managers are building their budgets against those objectives.