OK, I’m going to apologise before I start, as this subject is a bit of a bug bear of mine!!  And this comes after a recently discovery that a UK company has informed their staff that there are no salary increases this year, but are willing to pay $4m a year on recruitment agencies.  Good for the recruitment industry, but I fail to see how this helps the company itself.

But the recruitment agencies are not the only costs of losing a valuable employee.  There is management time (writing justifications, reviewing CVs, interviewing), HR time, coaching and training.  Then the cost of additional errors made by the new recruit, loss of productivity and client satisfaction as the new recruit gets up to the same level as the employee who’s left.  From calculations I’ve done in the past, someone earning £25k per year, could cost you an additional £25k to fully recruit and train.

And how much of a salary increase would have made a difference to the individual who had decided to leave the company?  They certainly wouldn’t have expected an additional £25k!

Unfair salaries are one of the biggest de-motivators. To encourage motivated and engaged employees, the most effective (and scientific) way is to take money out of the equation.

Paying your employees enough or even slightly higher than the market, takes money off the table and encourages them to focus on the work and not the reward.  Rewards only motivate people to get rewards, not the creativity, innovation and skills to take the organisation forward.

This same company I mentioned above was renowned for its thorough training programme, but it is the other companies who are employing their de-motivated ex-employees that are reaping all the benefit.  Which organisation is more successful in its approach?

Have you calculated your full replacement costs?  Could your organisation be losing from high turnover, in terms of productivity and client satisfaction?  Employee motivation and employee engagement gains include commitment, team spirit, creativity, solutions based problem solving and reduced absenteeism.  Is it not worth investing in the latter rather than the former?

I’d be interested in getting your feedback.

For ways to improve employee engagement and motivation, download a free guide to Achieving Employee Motivation with No Budget please click HERE.



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