In a talk at the Logistic Conference Eastlog 2019 in Prague, Czechia, career coach Vaclav Sulista discussed the cost of employee fluctuation and the importance of corporate education. This is a summarized excerpt from the talk:
“Corporate education and training is one of the many critical factors that reduce employee fluctuation, resulting in cost-reduction for the respective companies as well.
According to current estimates, the average employee fluctuation for a highly specialized employee costs a given company seven (7) monthly salaries and 2.5 times the annual salary. Fluctuation generates undesirable costs, largely impacting areas such as recruitment, operations, customer relationship, and production. Besides the negative consequences on the pure organizational level, fluctuation also results in increased corporate risks, touching knowledge and sensitive data flow, unnecessary cognitive load and mental stress, chained demotivation of current and new employees, higher workload, imbalanced schedules, lowered team cohesion, etc.
It is proven that political uncertainty affects corporate investments in education and while some underestimate it, it drags consequences in the years after related reduction has been registered. Take for example the Association for Talent Development 2017 State of the Industry research report: the United States expenditure on employee training per month for 2016 was of $ 1.273, Czechia spent an average of 240 Euro per month, and Britain — only 226 Euro, being the European Union average set to 511 Euro per month. Caused by uncertainty about Britain’s withdrawal from the EU, this 2016 reduction in corporate education for Britain led to higher employee fluctuation in 2017 and 2018.
A 2016 Wall Street Journal Career Survey states that employees leave companies because 53% are looking for better pay and other benefits, 35% are dissatisfied with career development and growth opportunities, and 32% want new experiences. As a human resources specialist at a multinational pharmaceutical company, I have conducted my own extensive research on employee motivation between 2006 and 2011, and have segmented from the so-called exit interviews that 40% of departing employees leave because the company ceases to offer them learning opportunities. Most of you might already be familiarized with the concept of naming generations, and the one born between 1980 and 1993 is called Millennials. The largest population in the workforce, Millennials possess a competitive mindset and to them, learning and development opportunities is one of the first three factors for retention and the only aspect of retention that differentiates Millennials from other generation-segmented groups.
A Gallup 2016 Learning and Development Survey conducted by the Pew Research Center determines that 87% of employees look for opportunities to develop as an essential professional criterion, and 68% strongly agree that if they are allowed to learn and grow, they plan to stay with the organization for at least a year. The reality in companies shows that 39% of Millennials strongly agree that they have learned something in the past 30 days prior to the survey; less than one in two agree to have had the opportunity to gain new knowledge over the past year; and, from those who have been allowed to learn something new, only one-third strongly agree that their last training at work was worth the time invested.
Corporate training involves costly investments in time and budget management: I strongly recommend that companies willing to achieve a higher retention score, especially concerning competitive and looked-after talents, develop a Personal Development Plan for each employee, and determine a clear and transparent strategy reflecting cost and time-wise corporate expectations on the job training, mentoring, and coaching.
Mastering the future requires the ability to continuously adapt to an ever-changing environment on the macro level that is translated to both organizations and individuals as micro-level actors. Success in the 21st century requires that corporations maintain motivation in their workforce since competitiveness is opening on the global scale and employees work increasingly in remote environments. While individuals are responsible for their own education, organizations must ensure corporate-related one so that the crucial pillar called ‘human resources’ plays its role in corporate development and ‘survival’ on the cutting edge of global competition in the respective sector.”
How about you? What motivates you to stay on your actual job? What makes you look for better employment?
Share your thoughts and experience with us and reach out to Vaclav Sulista for career coaching and training.