8 Reasons Why It’s More Cost Effective to Retain Than Recruit
Where should you put more emphasis: On recruiting new employees or retaining your current staff? Most owners will say “both,” but the smart money should be on retaining your staff. In the end, you’ll see how it not only builds your current company but also helps your recruiting efforts down the road.
1. Retaining an Employee Can Help You Improve Your Business. If you have an underperforming producer, doesn’t it make sense to seek out a new sales person to increase the volume? The only time I’d say yes is if you have an absolutely fantastic product and your current staff simply won’t work to sell it.
But what if you have a staff that has proven itself to be capable in the past? Then you need to look internally at your current product and service offerings. Do you really have something that can be sold? Are you offering something the marketplace is really demanding?
Be sure to have your ducks in a row internally, otherwise you’ll spend enormous amounts of cash on a new hire that can’t sell the unsellable either.
2. Recruiting Can be Extremely Expensive. This infographic from GetHired.com puts the variable estimate at $18,795 to hire a new employee.
In the printing and allied industries, this cost likely increases. The more specialized you are in your business, the more difficult it will be to bring in a newbie. Expect that $18K investment to be even higher if you want to start from scratch.
3. Every Business Needs a Retention Program. You’re going to need to build a retention program no matter how strongly you need to recruit. Strengthening your retention efforts can only lessen the need to recruit, so why not put a sustained effort into your own program?
This doesn’t have to be exceedingly difficult, either. Jeff Ignatowski, Director of Sales for the Emerald Corporation, believes you can do a world of good simply by getting to know your team and providing them with personalized rewards.
He recalls a sales producer who was an avid golfer and wanted to buy a “Big Bertha” driver. When he hit his quota, instead of just cutting the employee a check, he purchased the Big Bertha and presented it. It’s like getting a meaningful gift from friends or family; it strengthens the connection.
4. Retention Helps You Understand How to Recruit. Doug Wick, President of Positioning Systems, related the story of how a software company retained its top IT personnel. Its engineers were always in danger of being poached by competitors, but instead of throwing money or benefits at its talent, the company asked them a simple question: “Is there a part of your job you really dislike?”
The company would then try and do everything it could to remove the “dislikes” from the employee’s jobs, such as assigning tasks to administrative staff.
The company found it extremely effective, as employees simply couldn’t be wooed by more money. They had to seriously consider the possibility of having to once again perform tasks they didn’t like.
Creating this type of retention program also helps you create ideal positions which you can use to entice new talent.
5. Retaining Your Team Builds Loyalty. Let’s return to the example of the under-performing producer. If you go the extra mile to improve your product and services, and you also work closely with the producer to strengthen their skills, that belief in the individual can build amazing loyalty.
It’s like the sports team that sticks with a player through a slump. The performer remembers that loyalty when a better offer comes along.
6. Retention Keeps Industry Expertise Away From the Competition. If you’re in a highly specialized industry, the one thing you don’t want is to have your talent jump over to a competitor. It’s hard enough to train a person on specialized equipment and processes. It’s a huge expenditure if your staff is poached after you’ve made the investment.
Besides, are you really willing to make the investment to train new employees? Many companies are not.
You compound your problem by having to find replacement workers. It’s a lose-lose scenario.
7. Even if You Want to Recruit, Your HR Staff is Probably Ill-Equipped. I recently wrote a piece on recruiting and retention that will appear in an upcoming edition of iSP magazine. I spoke to not only Jeff Ignatowski, but also Michael Brenk, who specializes in printing industry recruiting and is a Managing Partner with Global Recruiters of Clarendon Hills.
Both Jeff and Michael noted that most HR departments simply are not equipped to recruit top-level management and sales producers. Finding these people requires extensive networking and outreach, and won’t be accomplished by posting a position on Monster.com.
HR departments are over-burdened with a wide range of HR functions, and simply don’t have the time to focus on recruiting. If you want to recruit, that’s fine, but don’t expect your internal staff to bring in the top people.
8. Get Lean and You Might Not Need to Recruit. Earlier, I mentioned the need to look internally at your products and services in an effort to create a more marketable product.
You may also want to look internally at your operations. Are your processes and procedures as streamlined as they should be? Are you spending excessive amounts of money on supplies and machines for non-profitable products?
Creating lean metrics that pinpoint the profitable areas of the company may help you realize that you don’t need to recruit anyone at all. You may actually wind up getting smaller instead of growing bigger – and becoming more profitable in the end.
Building a retention program is an arduous process that is best enhanced with personnel evaluation programs like top-grading. It’s an effort that will be well worth it in the long run. One of the most repeated phrases in business and in life is "You get what you pay for." Build a solid retention program, and you’ll find what you get is worth every penny.
Photo by: Victor 1558.
Rock LaManna is the President and CEO of the LaManna Alliance. The LaManna Alliance helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic transition – including mergers, acquisitions, organic growth, and exit / succession plans.