Director and Recruitment Specialist Ali Kimmorley recently presented in conjunction with Skildare and Osborn Law at their sold out Workplace HQ event ‘When Silence is NOT Golden’. The session covered how to create the ideal workplace through communication, how to build an 'A Team’ by having brave conversations, the real cost of turnover, and specific performance management case examples. Here we have included a snippet of Ali’s presentation which details why silence leads to poor productivity, and what the real cost of turnover is to a business.
A silent workplace can take on many forms, and a common theme surrounding silent workplaces is a lack of collaboration amongst divisions, teams and individual employees. However, a truly silent workplace where brave conversations are almost never had looks like this:
Very little verbal communication among teams and colleagues
Misbehaviour allowed through ignorance
Employees are unsure of business expectations
There is uncertainty around job performance; good and bad
In an environment where workplace culture is silent and people are not brave enough to rip the band aid off and have real conversations, it can often lead to low morale, below the line behaviour, lost productivity, and more importantly, a merry-go-round of employees. Unfortunately, I’m not referring to the fun type of merry-go-round here. It’s not just the poor performing employees who leave, but the quality, employable employees become more open to a “tap on the shoulder” to change roles.
Throughout the course of my career, I’ve spoken with many employers who believe “anyone is replaceable”. This may very well be true and at the end of the day we all move on at some stage, but what if we could avoid having unnecessary turnover of employees that we would love to retain.
What are the consequences of a merry-go-round of employees
These may seem obvious to some however are easily forgotten and only thought of when it is too late and the employee has already made a decision to leave:
You have to recruit the role which costs time and money
You have a vacant seat and loss of productivity
The business may need to adjust to market conditions to replace the quality employee you had
You have to train the new person and wait for them to be at the same capacity and level of productivity as their predecessor
The employee who left may have taken corporate knowledge along with them, not to mention potential clients who may follow!
What does it cost to replace an employee
Depending on the size of your business, the cost of replacing an employee can be anywhere from 50% to 150% of a person’s salary. For a business of 50 employees for example, it is estimated to be 100% of the persons annual salary. In 2018 the average full time adult salary was $82k, therefore it costs on average $82k every time just one person leaves a 50-person business, and it’s even more costly for a smaller business.
Now to consider the accrued cost of turnover for a 50-person business. According to the Australian Institute of HR, in 2018 the average turnover of businesses with 50 people or fewer was 22% which equates to 11 people each year. That is $902k straight off your bottom line. Even for those 20 person business owners, this results in 4.4 people annually at a minimum cost of $360k. Wow… think of how much we could do with that lost profit by reinvesting in the business.
We all move on eventually...
How does this cost relate to silence in the workplace you ask? The answer is simple. According to a survey conducted by SEEK, the top reasons why employees move jobs is due to:
Lack of regular communication from Management
Limited problem-solving opportunities (due to Managers not making themselves available)
Feedback only received during formal performance reviews once, maybe twice per annum
Lack of recognition from Managers
As a business owner I know that time is my worst enemy and sometimes we simply just don’t have time for having conversations with our team. But there is a solution…
It can take just 15 minutes
The irony is if we freed ourselves up for just 15 minute timeframes more regularly in order to give real time feedback, we will save the time and money spent on recruiting for employees who decide to leave our business unnecessarily. What difference could just 15 minutes make?
15 minutes of positive feedback will inject energy into the employee to keep doing more great things
15 minutes of real time feedback on poor performance gives an opportunity for employees to improve and work smarter
15 minutes of brave conversations will make all the difference