If you’re a business owner, you’re aware of how difficult and expensive it is to replace the key players in your organization with quality candidates. It’s estimated that the cost of replacing an individual employee is between 1/2 to 2 times the employee’s annual salary. With sky-high costs like that, employers are always looking for good ways to reduce turnover and keep their best employees on the payroll. While many companies tackle this issue by offering big benefits packages, catered company lunches, and gym memberships, they sometimes neglect to address the structural issues in their organization, like a lack of upward mobility.
The Importance Of Advancement For Employees
Sometimes fixing a turnover problem can be as simple as making sure you offer career advancement opportunities and internal promotions. A company’s hiring practices send a message about how much they value their internal talent and what long-term prospects an employee has with them. It’s estimated that more than 20% of employees quit or consider quitting after being passed over for a promotion. That number is even higher for employees passed over for an external candidate, so it’s clear that promotional opportunities are crucial when it comes to making employees feel appreciated.
Creating opportunities for upward mobility also positively impacts a business’s overall culture. In fact, 56% of employees believed promoting from within is better for morale. Employees are also more likely to respond well to managers who were hired internally versus externally, which can boost overall productivity. In short, investing in your employees is just good business.
The Opportunities For Growth
So how can you ensure that your employees see the potential for growth in your organization? Well, if you want to keep your top talent for as long as possible, you need to offer advancement opportunities. One great way is through an “internal first” hiring policy. That means that when you have positions open in your organization, you offer them to your current employees first before opening them to the public. You would only open the position to external candidates in the event that there are no suitable current employees to fill the role.
You can also publish a transparent “raise schedule” for your long-term employees. Depending on your industry, this compensation package could vary to include increased vacation, benefits, or salary. But the most important thing is to show employees that if they stay with the company, they will be rewarded. This could be the difference between an employee staying with your business for 5+ years after being hired or an employee leaving after a few months or a year because they don’t see any potential for a compensation adjustment.
Making sure your employees know they can move up the ladder is crucial for the success of your business. By creating internal opportunities for current employees, you can boost productivity, improve morale, and reduce turnover.