Most business leaders have heard of “The Great Resignation” but not all understand what is happening or have felt its impact yet. There are a variety of factors contributing to this phenomenon, but it’s more important to focus on ways to mitigate the impacts to your business, since talent-related issues can impact your business at any time, not just in 2022.
What is the cost of a resignation?
Regardless of why an employee resigns, the cost of that resignation should not be underestimated. Even if an employee was not fully independent or caused some drag on your team’s overall productivity, hiring costs can be considerable, especially if the skills you are looking for are difficult to find. The SHRM estimates that the cost of replacing an employee can range from 50% to 200% of that employee’s salary.
But the impact doesn’t necessarily end there. In a tighter labor market, it can take longer to replace an employee who leaves, and that can affect other employees who need to fill in and do things they don’t usually do. That will drag down productivity and impact profitability. In the face of rising costs, a creative and proactive compensation package is a good idea.
Don’t let your compensation package be all about money
As soon as someone says “compensation package” most business leaders think about salary. In times like this, that can be a scary topic given all the publicity about the increasing salaries in the face of “the great resignation.” Don’t panic. A good compensation package goes beyond salary, and a creative one doesn’t have to cost as much as you might think. In fact, this may be a good opportunity for achieving better cost-efficiencies and maybe even saving some money.
For example, right now many employees want to be able to choose their work location. If your team has been working remotely since early 2020 and they’ve remained productive, you may want to allow them to chose their work location and use a workplace “hoteling” model for times when the work must be done in-person. Look at your Real Estate costs and trim where you can, and get creative with your tax treatment of the properties you own to save money.
There are other ways to create compensation plans that will attract and retain the best talent for your company but which won’t break the bank. These might focus on benefits, deferred compensation or even equity. The key here is solid business planning, and Hundley advisors can certainly help you ensure your business is as profitable as possible, even in the face of the current environment of employment turmoil.
Call us today and we will help you set up a proactive plan for improving your profitability and getting through “The Great Resignation” with flying colors.