The corona crisis has further exacerbated the already fraught competitive environment of many companies. In this context, personnel downsizing programs are often seen as an effective means of optimizing costs and processes in the medium and long term.

However, HR management tools such as termination agreements and severance pay generate costs in the short term, which result in the loss of urgently needed liquidity. A further unpleasant by-product is unwelcome fluctuation, as employees critical to the success of the coming economic recovery cycle often accept timely offers to leave the company in question.

The dilemma of reducing costs and sustainability

Companies therefore often face a dilemma in crisis situations: they must reduce costs while also keeping talents on board. As a result, utilizing professional crisis management in times of deep recession is all the more important in order to strengthen internal confidence in the company and its leadership and to take the different needs of employees seriously. These needs must be addressed effectively to ensure that the relevant qualified individuals and number of employees are available in the company for an economic upswing.

The cost of fluctuation: money, know-how – and ultimately, productivity

The fact is: fluctuation is always expensive, especially when it is unwelcomely high. On average, it costs companies 25 to 50 % of an annual salary when employees resign, i.e. need to be replaced. The main costs incurred are related to the resignation, cover by other employees, filling the position and the induction process. Generally, the more critical a position is to success, the higher the costs.

However, an unwelcome high fluctuation rate, especially regarding employees critical to success, also has non-monetary implications. The most serious being the loss of expertise. In addition to this, the frequent induction of new employees lowers the productivity and commitment of the remaining workforce. Employer branding can also be affected, which in turn deters potential applicants.

A clear business case

Retention management is therefore more than just a nice-to-have tool. Even in crisis situations, it offers a clear business case – for saving costs in the short term as well as for long-term future investments. But what about crisis-specific retention management in your company? Rather than going by gut instinct alone, it is worth asking several key questions to identify specific pressure points.

Key questions for identifying retention problems:

  • Are there positions that you simply cannot fill?
  • Are projects delayed or even canceled due to a lack of employees?
  • Are high performers leaving the company or are new employees resigning during their probationary period?
  • Is employee commitment and satisfaction sinking – especially in those roles critical to success?

If the answer to one or more of these questions is “yes”, it is likely that your company needs to take a closer look at how to successfully address challenges in retention.

The Retention Management Toolbox: implementation using own resources

In order to address the causes and effects of unwelcome high fluctuation and to eliminate retention problems, it is first necessary to determine the specific target groups in which a particularly high fluctuation rate prevails (classification). With this as a starting point, the causes of the problem can be identified and suitable counter measures developed. These are then realized during the implementation phase, which provides a long-term solution to the core problem of retaining employees and talents critical to success.

However, the prerequisite for this is that all steps are carried out conscientiously using the appropriate methodological tools, that they have a logical structure and that the right conclusions are drawn. The hkp/// group has developed the Retention Management Toolbox to enable companies to do this in the most resource and budget-friendly way possible. This toolbox helps to get to the root of the problem and develop a solution via a structured approach. In addition to detailed information on carrying out the project, the toolbox also includes the necessary quantitative and qualitative tools such as interview guidelines and catalogs of measures. The involvement of experts within the company is not necessary. All that is required to implement the well-described process steps is a project manager, and possibly a small project team from HR.

It is not often that it is this easy to start tackling a challenge – and the solving of retention problems is urgently needed in this current situation. After all, more restrictive measures regarding personnel structuring and costs, and employee retention initiatives are two sides of the same coin. Only when both are taken into account, and the initiatives are coordinated, can the capacity for innovation, and therefore an upswing, be secured.

Further information

More information about the Retention Management Toolbox can be found in our flyer (see download button, top-right). Our hkp/// group retention experts are also happy to help.

Author David Voggeser

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