The quality of your team can have a HUGE impact on your cash flow. You are much better off paying ABOVE market wages and benefits to a smaller number of "A" and "B" players than trying to save some money hiring average people at lower wages.
Here are two examples:
- A manager at a bridal shop who ran all sales and marketing. She was not paid in line with the results, asked for more, was told "no", so she left. When the store owner realized how much work was being done, a sales manager and a marketing manager were hired. The sales manager wasn't up to the job and quit after a few months.
- We reorganized a division that was losing a LOT of money. We laid off 50% of the workforce that did not have the skills or attitude that was needed. We rehired back 25% of the headcount with people with the right skills. We needed to pay much more per person, and saved very little on compensation. The smaller team produced much better results and we were profitable within 1 year.
People think that this...
Why don't employers see the huge CASH cost of losing their best people, and give them what they need to stay?
Employers spend a lot of extra money when they lose their best people. Here are some of the incremental hard costs:
- Training costs for a new person
- Recruiting costs
Even bigger are the "hidden" costs:
- Employer's time to recruit
- Lost productivity
- Emotional cost to the team
What would it take to keep the best people?
1. Ask them. They'll tell you.
2. Some money. Less than replacing them.
3. Recognition. Get creative and see #2.
4. Bonus idea: Reward them with something that benefits their significant other and/or family.
Back to the cold hard cash facts. Studies show it costs you 33% of someone's annual salary to replace them. You can keep people for a lot less.
Am I right? Wrong? What's your experience?
Let me know in the comments below.
#wtcfg #humanresources #finance