Replacing an employee can cost 2-3 times annual salary. The table below shows the return on investment (ROI) from preventing only 10% of unwanted turnover.
|A) Number of employees
|B) Average salary
|C) Current annual turnover
|D) Target annual turnover
|E) Unwanted annual turnover ([C-D] x A)
||45 unwanted departures
|F) Annual cost to replace each unwanted departure as a % of annual salary
|G) Total cost to replace all unwanted departures (B x E x F)
|H) Unwanted annual turnover prevented with high-impact statement
|I) Unwanted annual turnover prevented with high-impact statement
||5 unwanted departures
|J) First-year ROI from preventing this unwanted turnover ([G x H] - project cost)
|K) First-year ROI as a percentage (J / project cost)
Call Communications TRG to get your own ROI projections.
Why do some organizations hold back?
Some HR leaders will say: “We already have a statement” or “Our statement seems to be doing the job.”
In our experience, many organizations do not measure the impact of their statements, and therefore don’t know if their statements are working or not. And others run the same content and branding every year, which is like trying to engage magazine readers with the same stories in every issue.
As organizations move more talent management processes into their HR systems, such as Workday or SAP, there is also a push to leverage their technology investment.
Some HR systems have an optional module that outputs a one-page compensation statement. However, this statement tends to only show employer costs for compensation and benefits rather than connect employees to the broader employment deal and organizational culture. Also, this module typically can’t be used to attract job candidates.
While many HR leaders believe that total rewards statements are a key recruitment and retention tool, they also have conflicting priorities and say “We need first to get our data issues under control” or “We need to work on our HR fundamentals first.”
If this is your situation too, Communications TRG can help break the timing logjam by helping you visualize how a high-impact total rewards statement can help you meet strategic HR goals.