Do you feel your company is rowing in the same direction?

#Food For Thoughts

📉 In the last years, companies had a visitor in their offices: a big silent elephant. Companies aren’t performing as the precise Swiss watch they used to be. Productivity has decreased and nobody dares to say it. I’m not talking about a Sales issue where the next macroeconomic recession is the reason why they didn’t hit their targets. Nor Finance needing more days for whatever they do despite having more sophisticated tools than a decade ago: this happens across the board.

🐘 We can argue that this elephant had covid but, besides the temporary circumstances, businesses were rapidly forced to come up with new working models: who doesn’t have a friend working hybrid or self-proclaimed 👩🏻‍💻 digital nomad?

🐥 Or perhaps it wasn’t an elephant but a new generation Z that is triggered differently than the ones before them.

🤯 It doesn’t matter: employees are taking a deep look inside themselves and wondering if they are happy in their current job. And that leads to attrition. Or rotation. Or turnover rate: whatever sounds best to camouflage that 1/3 of employees change companies every year.

🔢 Let’s play with some numbers 🤓
1️⃣ Avge. gross salary per employee of €3k/month means €70k/year for the company
2️⃣ Your turnover rate is 20% and we don’t need to enter into a 💔 “it’s not you, it’s me” discussion: employees stop producing at their fullest way before their last day
3️⃣ A couple of months of severance costs
4️⃣ and a drop on productivity when offboarding & onboarding: not even the best hires know your rules & tools before their first quarter!
5️⃣ Recruitment fees of 18% of the year salary. Add 3 months to find the right candidate & another extra one till they join
6️⃣ You have 100 employees total

👀 What you can measure…
🔻 Company costs remain at a 100% but productivity drops to 47%
🔻 You gave away €350k in recruitment fees and severance payments instead of salaries

🔎 …and what Excel won’t tell you!
🔻⏳ You hit your financial plan… but your productivity is significantly lower!
🔻🫂 It takes around a year (depends on the job) for the new employee to produce the same as the old!
🔻📉 Domino effect in other departments leading into lower company results ⇒ e.g. do not pretend your account executives hit their quotas if you are missing the ones generating the leads!
🔻🥲 Drop on staff motivation:
🤨 If they absorb the workload from the leavers they do it for the same salary
😓 They train & mentor new peers → unproductive hours ⇒ lack of self-realization
😡 or perhaps the employee that left wasn’t the best peer to work with, right?

🏁 Wrapping up: we can call it “healthy rotation”, blame the recruitment process for it or the new generations for been triggered differently but the truth is that the traditional model of replacing employees is no longer sustainable.
🍿 Or is it? Would love to read your thoughts ⤵️

Federico Fiz

Federico Fiz

Helping companies optimize their resources through a travel experience