May 03, 2022
Employee turnover more than doubled last year to 18% from 8% in 2020 and it is expected to increase further this year to 18.2%, according to our latest HR Barometer Report. This is the highest rate since the report began[1] six years ago.
Over half (56%) of employers cited ‘higher salary with the new employer’ as the main reason for the increasing employee turnover with ‘career progression’ at second and ‘better work life balance’ at third.
In an effort to address this challenge, half (54%) of employers have or will be increasing salaries in 2022 with an average increase of 5.3%. This increases for smaller employers with less than 50 employees with six in ten (63%) increasing salaries by 6.6%.
Commenting on increasing salaries, Sarah Fagan, Managing Director of Adare Human Resource Management said: “While the market is seeing increases in salary, total reward is not just about the financial benefits. It should incorporate the intrinsic value brought through your business culture. It recognises and shares successes of employees, it balances paid benefits with those of a non-financial value. And, most importantly, it considers the employee experience as an asset that requires the right investment.”
Increasing cost of recruitment
The cost of recruitment has also increased to €7,491 per employee, up from €4,215 in 2021 and €6,895 in 2020. This figure nearly doubles for large businesses with 250+ employees to €14,690 per employee. And with an expected turnover of one fifth of this group of businesses, the financial cost of recruitment for these organisations is significant.
Staff Retention
Given the increasing cost of recruitment as well as a skills shortage across all sectors, it comes as no surprise that ‘retention’ is the top HR priority for over half (52%) of employers this year. This is followed closely in second place by ‘employee engagement’ with 51% citing it as a top priority. Both go hand-in-hand, as an engaged workforce is more likely to be loyal and productive while also providing an employer with a real time gauge on how content employees are as well as identifying any issues.
Fagan said: “During the pandemic, the employment landscape was in a state of flux as new ways of working emerged. However, as evidenced by our research, it is clear it’s no longer about new ways of working; the focus now is on people.
“It is broadly accepted that flexible, blended, hybrid and remote working are here to stay. But while the pendulum of work life balance swings more favourably towards employee preferences, flexible work arrangements are only one aspect of the true Employer Value Proposition.
“Now more than ever, investment in people is of critical importance. Not only because of the expected turnover and associated costs of replacing employees, as outlined in our HR Barometer Report, but also because within the market there is a skills shortage. Developing a robust retention strategy will provide the competitive edge in maintaining the talent that you have and, with the appropriate considerations, will positively impact on any talent acquisition.”
Flexible Working
‘Flexible working arrangements’ was the top initiative introduced over the past 12 months by nearly four in ten (39%) of employers to support retention. Three in ten (31%) businesses increased salaries, nearly double (16%) on the previous year. While just under a quarter (23%) promoted employees internally in the last year to help retain talent.
The Right to Request Remote Working Bill 2022 reinforces the Government’s commitment to their National Remote Work Strategy and provides some clarity to employers. While remote and flexible ways of working really came to the fore during Covid-19, our research shows that it has been at the top of employer’s agendas since 2018.
The introduction of remote and flexible ways of working presents employers with an opportunity to potentially address employee turnover and resourcing issues, both of which are evidenced to be significant issues in the current market.
If you would like to hear more about the HR Barometer Report series, please contact one of the team at Adare Human Resource Management.
[1] Employee Turnover: 2020 – 8%, 2019 – 17%, 2018 – 14%, 2017 – 10%