And there’s data to back that up: according to Gallup, the cost of replacing an individual employee can range from one-half to two times the employee’s annual salary. This potentially amounts to more than $2 million dollars in cost savings per year for a 100-person company who focuses their efforts on talent retention.
The Case for Improving Talent Retention: The Cost of Losing an Employee
Anyone who has been involved in the hiring process understands that replacing a departing employee has both hard and soft costs.
Hard costs of losing an employee include:
- Administrative costs involved in the process of exit interviews and employee departure
- Costs related to severance packages
- Covering the responsibilities of the role short-term (hiring temps, overtime, etc)
- Budget spent on recruiting a replacement
- Training and onboarding for the new hire
Soft costs of losing an employee include:
- Lower productivity of the dissatisfied, outgoing employee
- Loss of institutional knowledge
- Time detracted from key business efforts by employees involved in conducting interviews and providing onboarding to the new hire
- Lack of speed and proficiency of new employees during the ramp-up period
- Lower company morale across the organization among employees who may be wondering if they should be looking for external opportunities as well
Add it all up, and it’s easy to see how high levels of talent attrition negatively impact a business’s bottom line. And when key employees resign, this can set off a chain reaction known as 'turnover contagion’. This phenomenon can lead to more of your employees leaving and forcing your organization to incur even higher costs.
The Benefits of Investing in Talent Retention
With increasing levels of competition and difficulty achieving healthy profit margins, talent retention is a logical way for organizations to not only save money, but also boost productivity and overall business outcomes.
But high levels of talent retention offer more than just a metric for HR or talent management professionals to report on during quarterly business reviews. Investing in tactics to keep your talent engaged and happy pays off in a multitude of ways.
Below are a just a few of the benefits of investing in talent retention:
- Improve employer branding and attract new talent
Word travels fast about employee experience. And with anonymous employer review sites like Glassdoor, it’s hard to keep talent turnover a secret. On the flip side, employees with positive experiences at your company will share their opinions and help you attract new talent.
- Increase institutional knowledge and overall performance
The longer an employee has worked for your company, the more institutional knowledge and industry expertise they will have gained. Improving your talent retention levels increases the number of seasoned employees you have who can represent your company in the best light—and drive your business forward.
- Maintain workplace efficiency and productivity
The ups and downs involved with a constantly shifting team pull employees out of their flow, away from the core work they need to execute for your business to succeed. By reducing turnover, you keep your talent focused on the important work you brought them on to execute.
- Foster a positive and high-performing work culture
Happy, engaged employees perform at higher levels and help build the culture you want within your workplace. And when new talent joins your growing team, they’ll be introduced to this culture and the virtuous cycle continues.
3 Ways Digital Credentials Can Help Improve Talent Retention
It’s clear that employee retention is a worthy investment. What might not be as straightforward, are the tactics required to ensure your employee base stays engaged and satisfied in their career with your company.
Providing your employees with the opportunity to develop professionally—and recognizing those achievements through digital credentials—are effective ways to reach your talent retention goals and drive a culture of learning along the way.
In fact, PVH Corp’s Senior Direct of Talent Development had this to say about using digital credentials:
“People are really excited about participating in our learning programs—and that’s a direct result of the Credly digital badges. Earners have not been shy about sharing their badges, starting a conversation with co-workers, and encouraging others to learn a new skill. You can’t ask for more than that.”
Read the full PVH case study.
Below are three ways digital credentials can help improve talent retention in your organization.
1. Improve engagement and performance with development opportunities
Today’s employees expect development opportunities. This is especially important to younger professionals, and according to the Deloitte Global 2022 Gen Z and Millennial Survey, access to L&D opportunities is the second most important reason Gen Z and millennial respondents choose to work for a particular employer.
By giving your employees upskilling and reskilling opportunities—and tying them to digital badges that can be shared and celebrated—you make working for your company more attractive to top talent with a growth mindset.
2. Increase feelings of appreciation through a recognition culture
Everyone wants to feel valued for their contributions. Issuing digital badges helps increase the visibility of your employee’s achievements and can in turn foster a strong recognition culture.
More than just a line on a resume, digital credentials provide a verified way to prove proficiency and bring validation to an employee for their accomplishments, skills, and capabilities. Badges can also be shared externally on social networks and in email signatures—extending the sense of pride to outside the organization.
3. Encourage career advancement through targeted learning journeys
Your employees need to know they have paths for advancement if they stay with your company. By investing in employees through targeted learning journeys, you signal that you recognize their potential and encourage their growth.
Issuing digital credentials helps you gain insights into the workforce by giving you a clear picture of the skills your employees possess—and where gaps may exist. This allows you to deliver individualized training roadmaps and show employees the path they can take to advance within the company.
Take a Skills-Based Approach to Talent Retention
Take an intentional and targeted approach to learning and development with talent insights that will help you meet the needs of today while preparing for what comes next. Our workforce solutions give organizations forward-looking analytics, forecasting tools, and verified skills data that workforce planning teams can use to take a skills-based approach to talent management.
Schedule a demo to learn more today.