Hi. Several times, we've talked about the importance of attracting and retaining good employees. We just assume that this is always valuable. I want to spend a little time talking about why this is the case. First, let's talk about retaining employees. When the employee leaves, there are costs associated with finding a replacement. You might think it's really no more than placing an ad in a newspaper, it is actually much more complicated than that. Here's a list from an article of the total cost of losing an employee. I'll post the article as a reading. The total cost includes the cost of hiring a new person, so that's advertising, interviewing, screening, and hiring. The cost of onboarding the new person, that's training, it's management time, dealing with the person. There's lost productivity. A new person may take one or even two years to reach the productivity of the person that's left. There's lost engagement. Other employees who see high turnover disengage and we lose their productivity. There's customer service and errors. New employees take longer and are often less adept at solving problems. In health care, this may result in much higher error rates and illness and other very expensive costs. There's training costs. Over two or three years, you're likely to invest 10 or 20 percent of a employee's salary or more in training, and that's gone when the person leaves. There's a cultural impact. Whenever somebody leaves, others take a little time to ask why. Now this is a long list. What does it mean in terms of dollars? Here's something from another article. The cost of replacing an employee varies by the role of the employee. The study found that for high-turnover low-paying jobs, so those earning under $30,000 a year, the replacement cost were about 16 percent of annual salary, so about $3,300 for a person earning $10 an hour. For mid-range positions, so those between 30 and $50,000 a year, they cost about 20 percent of annual salary, so $8,000 for somebody earning $40,000. For highly educated executive positions, the cost could be much more, possibly even double the annual salary. So, retaining good employees avoids these costs. But how do you do it? Well, the very first thing to do is hire the right people. Make sure there's a good fit between what the person values and what the company values and what the company can provide the person. Don't try to sell the person on working for your company. Instead, be absolutely honest about the type of people who are successful and happy in your company, and let the applicant decide if there's a fit. Probe a little bit to make sure that the company's culture matches the applicant's. If the person just wants a paycheck, that's not a great sign that they're gonna be engaged in a contributing employee. Second, be sure that your company offers people opportunities to grow, to do meaningful work, and if they're inclined to innovate. People need to bring energy and excitement to work, having new roles or projects can provide that. Third, let people know they're appreciated. Sometimes, this is with money, but thank yous and recognition can go a long way too. Let's shift to attracting good employees. We already mentioned that retention is partially determined by hiring the right people. But how can you attract those people to your company or organization? It turns out lots of companies are struggling with this. Companies have talent acquisition strategies and employee value propositions, and there are lots of management gurus making suggestions. Putting together suggestions from several sources and filtering them, for this class, here a couple of approaches to attracting the people you want. First, identify the type of person who will be a successful and a good contributor in your organization, then figure out what perks or compensation or other attributes that type of person is likely to respond to. For example, if you want people who are eager to learn and grow intellectually or expand their skills, offer to reimburse educational costs. If you want innovators or entrepreneurs, you need to have a culture that encourages and nurtures new ideas. The company has to accept and reward progress, not perfection. Realizing that getting something perfect is a long-term process and that companies just have some flexibility in giving people time to pursue an idea that seems to have promise, that's that famous half a day a week that Google gives employees to create. If you want people to engage with the community, the company needs to show that it does a lot of outreach so that potential employees can see themselves in those roles. If your business model requires developing close relationships with customers or clients, you need to show that attitude in how employees are treated. Basically, the company needs to demonstrate, with authenticity, the qualities that it's looking for in employees. Now what does this have to do with sustainable business? Many talented people are looking for positions that allow them to be creative, to grow, and to have a purpose or be proud of what the company is doing. That purpose piece is often linked to a company's social and environmental performance. Talented people have choices about jobs. They want to be proud of the company they work for, the products it sells, and the way it does business. Over time, companies will get and retain the employees they deserve. A company that doesn't care about people or a communities or the environment will end up with employees that don't care about the company and that will make a minimal contribution to the company's long-term prosperity. Companies that care about customers and communities and take pride in producing great products will attract people who have a passion for the business, take pride in doing a good job, and helping the company grow and prosper. Thanks.
