Your Competitive Advantage 1. Employee Retention
A business’s competitive advantage is the factors that allow a company to produce goods or services better or more cheaply than its rivals enabling it to generate more sales or superior margins compared to its market rivals. When I ask business leaders what their competitive advantages are they often identify their brand, the building and plant they own and their intellectual property when in fact their it is their people. When you position your people for optimal performance you gain optimal productivity achieving optimal profit margins.
There are 7 keyways to position your people for optimal performance and when they are all on point you will have the competitive advantage you need for market share leadership and business resilience.
1. Talent Retention
2. Employee Brand
3. Culture
4. Hiring Strategies
5. Onboarding and Training Practices
6. Leadership
7. Career Pathways.
Let’s scrape the surface of Talent Retention.
Often a business considers its 15 - 20% payroll-to-revenue expenditure as its cost of staffing but this is an incomplete measure, the real cost is an eye watering 100 – 200% of the employee’s gross annual remuneration each time the position is turned-over.
So, let’s look at the actual costs starting with the talent itself. The value of talent compounds each year they are with you. During their tenure they establish relationships with fellow employees and perhaps customers and suppliers, they gain intellectual knowledge particular to your business and their productivity improves resulting in increased profits.
Then you have the hiring costs for replacing talent. It takes 48.5 human hours and 8 interviews to recruit a single new hire. This is 25 hrs of job posting and applicant reviewing, 4 hrs of pre-screening and short listing of candidates, 12 hrs of interviewing and 7.5 hrs of reference checking and hiring wrap ups.
Then you have the rest of the contributing factors. Training and onboarding expenses including the trainer’s time away from their core functions, reduced staff morale and potential serial resignations, fractured teams, reduced customer satisfaction, lost sales opportunities, and lost customers, new-employee errors and if a bad hire has been made there may be exit strategy and personal grievance costs as well.
Retaining talent is a critical factor of your competitive advantage.