This year, 2008, risks being the year of the revolving door if employers continue to focus simply on attracting new staff, rather than developing and retaining current employees. The resulting staff turnover is expected to cost Australian businesses more than $A100 billion over the coming 12 months, according to forecasts by Unisys.
"At a time when the skills shortage is squeezing the Australian economy, staff turnover is turning into a major problem that is already costing the country's businesses more than $A100 billion a year. It costs more to continually replace staff, and in a tight labour market each new hire drives up wage levels for the same job role without a corresponding increase in productivity. When good staff leave intellectual property and the valuable relationships they established with customers and business partners go with them. All indications are that this will get worse in 2008," said Steve Parker, managing director of Unisys Australia and New Zealand.
Unisys has mapped out three important strategies to keep good staff:
- Accept that staff don't want the same job forever - find out what challenges stimulate them and develop a tailored progressive career path within the organisation.
- Identify and groom best performers . Work out what technical and business skills will develop the individual and ensure they access the training and experience to attain them.
- Support work-life balance. Offer mobile tools and flexible work arrangements to better manage time and encourage programs which support a healthy lifestyle.
Unisys' analysis showed the cost of replacing a worker is around 1.5 times that person's yearly salary. Based on ABS figures, 1.2 million people changed jobs in the 12 months to February 2006. Using average weekly earnings, that ended up costing the Australian economy more than $A100 billion a year.
A study by the Australian Chamber of Commerce found that 69.9 per cent of businesses were concerned about wage levels increasing without a corresponding increase in productivity.
"The Australian labour environment is challenging: we have the lowest level of unemployment in more than 33 years, around 21 per cent of Australians have a bachelor degree or higher, and almost one in five aren't in a traditional full-time role. In other words, employees are qualified, they are getting younger, they are on the move and they don't expect to stay with the same employer for the life of their career," Parker said.
"Instead of offering potential staff champagne and iPods when they join, as some companies are reported to be doing, Australian businesses need robust talent management programs which will nurture staff, provide the right long-term rewards and show workers a real career path."
Len Rust is publisher of The Rust Report