Good morning!
It's expensive to replace employees, especially when a company is looking to scale. By some estimates, losing an employee can cost a business up to two times that worker's salary, making employee retention a critical focus for companies in growth mode. In the newly released book The Experience Mindset: Changing the Way You Think About Growth, Salesforce’s global customer growth and innovation evangelist, Tiffani Bova, argues that many companies have placed employee experience on the back burner as they chase the attention and loyalty of customers. As a result, employers fail to properly assess why people leave or stay, leading to higher turnover.
Ironically, companies prioritizing the employee experience often see improved customer experience as an automatic byproduct, she says, citing real-world anecdotes from CEOs like Allstate chief executive Tom Wilson. "We are treating our employees as customers,” he says. “They don’t pay you in dollars, but in hard work.”
Bova posits that elevating the employee experience not only results in fewer resignations but also helps maximize worker performance. "Employees most committed to their organizations put in 57% more effort on the job," she writes.
In an exclusive excerpt from her book released Tuesday, Bova breaks down how to examine turnover trends and plug talent leaks.
“The cost implications of losing talent are significant, including the monetary cost of replacing employees. Studies have shown the cost of replacing an individual employee can range from one-half to two times the employee’s annual salary—a significant blow to many companies’ bottom line. How significant? U.S. businesses are losing $1 trillion dollars every year due to voluntary turnover.
But the cost of talent retention goes beyond employee replacement; it is a top challenge to company growth across markets and industries. 'Employees leaving too often, can’t keep top talent' was tied for the number one challenge to company growth by employees and number four (out of eight) ranked by the C-suite.
Retention of talent matters if you want to remain competitive, so use this data to determine why employees chose to leave to see if you can diagnose the hole in your bucket. For example, if new hires are quitting at a faster rate in their first three months on the job, your onboarding process may need work.
Unlike eNPS [employee net promoter score], which allows for real-time employee surveying, turnover and retention is a lagging indicator. Once someone leaves, the opportunity to save them has, by definition, passed. These are useful indicators, but measuring turnover and retention doesn’t let you off the hook for understanding whether employees are happy before they go, and if there was something you could have done to keep them.
Just as with CES [customer effort score], a high retention rate isn’t necessarily ideal. Low turnover indicates good EX, but it can also alert you to a lax performance review process. You must strike a balance between keeping top talent and developing promising talent while dismissing those who are underperforming. A good rule of thumb is to benchmark your voluntary and involuntary turnover and retention rates against other companies in your industry.”
Excerpted from The Experience Mindset: Changing the Way You Think About Growth by Tiffani Bova, in agreement with Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © Tiffani Bova, 2023.
Amber Burton
amber.burton@fortune.com
@amberbburton
