ALTHOUGH RETENTION is viewed a critical issue in Australian organisations, two thirds do not have formal employee retention programs while just 40 per cent employ someone to look after retaining talented staff.
A survey of 282 GMs, CEOs, HR and other line managers found that while more than 80 per cent now rate employee retention of high importance to the business, their companies spend far more on recruitment than they do on retaining the staff they already have.
The TMP Worldwide employee retention survey also found 44 per cent spend more than $100,000 on recruitment costs — mainly advertising and recruitment agency fees — compared with 16 per cent spending in excess of $100,000 on retention. More than a third (36 per cent) spend less that $50,000 annually on employee retention.
In addition, only half the respondents conducted formal follow-ups with new employees in their first three months while less than a third gave feedback to management on the progress of new employees.
Considering the amount of time and resources required to bring a new employee up to speed — about one-and-a-half times the employee’s salary — the report found this is clearly inadequate.
“Employee divorce is a lot more expensive than marriage, yet budgets allocated to employee retention would not indicate this,” it said.
Law firms need to recognise lawyer retention as a serious issue, according to law lecturer and editor of the Deakin Law Review James McConvill. “Generally speaking, the reason it is not considered to be such an issue from a business sense is that if one person leaves, there is someone willing to fill their shoes. [Firms] are wasting and not appreciating their major asset. From a business point of view it’s not effective, he said.
“Considering the amount spent in terms of training and building profiles for these partners, for management to say they can move them along is bad business,” McConvill said.
In large firms, where the attrition rate is higher than in boutique firms, they should focus increasingly on finding ways to keep their lawyers and make them happy in their workplace, said McConvill.
For HR departments, the survey’s findings point to an urgent need for changes in retention-orientated activities. Companies will remain in transactional recruitment mode and lose the ability to have employees’ intellectual property stay with their company if current spending levels on employee retention are maintained.
Formal employee retention programs “will become an increasingly important part of an HR professional’s role”, said Stuart Grenville, TMP managing director, Asia Pacific.
“Those who can demonstrate success in increasing staff retention levels for an employer can confidently lay claim to a contribution to the productivity and hence profitability of that business.”
HR and line management will have to cooperate to make a significant impact on the outcome of any initiatives, he said.
Securing executive support for retention initiatives shouldn’t be that difficult, Grenville added.
“There is enough data around to demonstrate the link between effective communications, retention, employee engagement, productivity and profitability,” he said.
“It is quite possible that retention will become a key competitive advantage for those who proactively embrace it.”
Melinda Finch is the Deputy Editor of Human Resources magazine, Lawyers Weekly’s sister publication.
Additional reporting by Kate Gibbs