Post from: MAPpingCompanySuccess
There are two attitudes when it comes to investing in people.
The common one considers it a cost that should be minimized.
The more astute believe it provides significant ROI.
Providing benefits can raise productivity and reduce turnover no matter the size or type of business.
Training is just as important (in England it can even stave off a corporate manslaughter charge).
It’s a well-documented fact that attitude/cultural fit are the most crucial factors when hiring, so where’s the sense in dumping people who are not only good cultural fits, but also possess institutional knowledge?
The graphic elegantly sums up the fear of the cost minimizers and the pragmatism of the astute.
One boss lesson that really needs to sink in is the true cost of replacing people.
- A decade ago replacing cost 2-6 times the annual salary and although the dollar amount has risen I’m sure the multipliers haven’t gone down—they’ve probably gone up, too.
- Losing the wrong person at the wrong time has the potential of crippling or even destroying the company.
As to ROI, look no further than Frederick Reichheld, founder of Bain & Company’s Loyalty Practice and author of Loyalty Rules!, and other loyalty books, whose carefully researched studies that a 5% improvement in employee retention translates to a 25%-100% gain in earnings.
That is one hell of a return for creating a culture that does the right thing by investing in its people.
Flickr image credit: Peter Baeklund