Employees Not Performing
When talking with small to medium enterprise (SME) and family business owners, and you ask them about their major concerns, many will express frustrations around the performance of their employees with sentences like “they just don’t take the care that I expect” or “they don’t seem to make the connection between keeping my customers happy and keeping their job” or “they just don’t seem to understand the business”. These are valid frustrations, but does the fault lie with the employee or the strategies and culture of the business that is their employer? It might be a combination of both.
Let’s look at the likely costs associated with replacing an employee if they leave within twelve months of commencing employment. Based on information from WorkplaceInfo 2013, the costs associated with replacing an employee earning $60,000 per annum are approximately as follows.
- Advertising, $2,700
- Consultant, $10,800
- Selection, $900
- Induction, $1,500
- Interviewing, $700
- Informal training, $6,700
- Loss of productivity, $3,300
- Four weeks’ pay, $5,000
- Performance management, $1,400
Total – $33, 000
This is a huge cost for any business to sustain. It’s therefore worth taking the time, and putting in the effort upfront to ensure that the following measures are put in place to minimise the likelihood of valuable employees not being engaged and leaving.
- Do we have a strategic plan that is clearly communicated to our staff?
- Do we have a succession plan in place that involves retention of our key people?
- Have we considered things like Employee Share Ownership Plans for our business?
- Do we have a productive and vibrant firm culture?
- Do our employees know what is expected of them?
- Do they receive constructive feedback on performance?
- Do we have a proper system of employee performance reviews?
- Do we have a comprehensive process for employee selection?
For most SME’s and family businesses, employees represent one of their biggest costs and also their greatest resource. Success and failure of a business can very often hinge directly around employee performance and retention. It therefore also impacts significantly on business value.
If you need help in this area, it is worth engaging some good professional help to get it right.