Want to Cut Costs? Keep your People

Want to Cut Costs? Keep your People

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Despite this understanding, investing in policies to keep employees is still seen by many as an optional extra, not a critical factor influencing their bottom line – though research indicates it shouldn’t be that way.

Samantha Crous, country manager of the CRF Institute, which identifies choice employers via International HR Policy and Practice Research says that certification as an employer of choice strongly influences the perceptions employees have of a company, and this is key to staff retention. “Employer branding is about investing in people and it is often only when upper management considers the return on this investment that they commit to the necessary strategies involved,” says Crous.

Return on investment

And the return on investment is significant, as top management is increasingly starting to realise, says Crous. In the case of staff retention, research has proven time and again that it costs more to replace a staff member than it does to retain one.

According to specialist staffing and recruitment company JDA Professional Services, replacing a staff member, earning R300K cost to company per annum, can cost as much as R750K in direct and indirect costs – direct costs include advertising and interviewing expenses, pre-employment testing fees, external recruitment agency costs, salary increases, relocation and training.

That’s the direct costs. Crous says that indirect costs can end up being even more. “Consider the loss of training, and the manpower and time it takes to develop the necessary skills in a new employee, or the loss of morale when a team member leaves,” she says. “Not to mention the consulting fees and overtime expenses. There is also company reputation to consider, which can have a ripple effect not only in the industry but to shareholders, to whom stability is important. Better employer branding helps cut down on staff churn and thereby saves costs.

“But enhancing employer branding does more than save money. It also serves to boost the alignment between the employer brand and the consumer brand, which, by influencing both performance and reputation, can have a positive impact on the bottom line.”

Internal marketing

Absa, a certified Best Employer, believes that companies should market and promote their brands in two ways: firstly to the customer and secondly to the talent market. Absa’s ethos is about taking a holistic approach to the attraction and retention of talent, and their HR Manager, Prenai Pillay, says integration and alignment with marketing and other parts of the organisation help deliver on a wholesome brand promise.

“And all of this helps to mark companies out as desirable places to work, which means that the retention and acquisition of quality staff gets easier,” says Crous.

Safripol, one of South Africa’s leading plastics manufacturers and a certified Best Employer, reports that it receives a high number of applications for learnerships annually. The company’s management improvement plan is driven by a shop floor engagement policy. This is based on a live document that continually tracks performance against goals. Employees update the scorecards themselves. In this way, the values and the culture of Safripol have evolved through participation before being codified and embedded into policies, processes and job descriptions.

Keeping contact

Some SA companies go even further in that they strive to maintain relationships with their people after they leave. An example is Ernst & Young, which ranked fifth in the 2011/2012 Best Employers Index. The organisation, through its ‘whole of life approach’ programme, has found that many people choose to return to the firm after pursuing other opportunities. The company has been able to promote life-long mutually beneficial relationships with its people.

The benefits of enhancing your employer brand extend well beyond the obvious, believes Crous. Returns such as improved rankings, filling vacancies more quickly and attracting a higher number of qualified applicants are but a few.

“The more subtle advantages, such as increased employee satisfaction and lower staff turnover, are sometimes difficult to correlate,” she says. “Yet studies have shown that a strong employer brand makes a significant difference to your employees’ level of engagement, staff turnover and to your bottom line.”

The Annual Best Employers 2012/13 Certification will be released in August this year. For more information about please visit www.bestemployers.co.za.

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