Digital Employee Engagement Whitepaper 2018

The following whitepaper discusses the high costs of employee turnover in businesses where

employees don’t typically have access to traditional digital communications platforms. In this

whitepaper, you will learn about:

• The true costs of high turnover rates • The top motivators and factors in employee retention • How to foster engagement with employees who are traditionally disconnected

Introduction: The true cost of high employee turnover

In an increasingly competitive economy, both nationally and globally, one of the largest

overheard costs for businesses of all types and sizes is voluntary employee turnover. If left

unchecked, these costs can greatly hinder growth and have devastating long-term effects on not

only individual businesses, but also specific sectors such as retailing and manufacturing, which

already face tremendous pressures due to competition from online retailing and outsourced

manufacturing. While these global trends that affect the U.K. labour market have been growing

Definition of Labour Turnover

Labour turnover is the ratio of people leaving a firm or organization relative to the total number of employees. Reasons for leaving can include retirement, better opportunities, and redundancies.

Digital Employee Engagement: How to Raise Retention Rates in the 21st Century

over the last 25 years, the U.K. and other industrialized nations have seen a significant uptick in

turnover rates in recent years.

Source: Trends and Drivers of Workforce Turnover, Mercer1

And these changes aren’t insignificant in cost. According to Oxford Economics, the

average cost to replace an employee is £30,614, costing British businesses more than £4.13

billion each year.2 That means it costs more to lose a single employee than it costs to pay the

£27,000 average annual salary of full-time workers in the U.K.3 These figures include not only

the costs related to replacing an employee—time spent searching, recruitment agency fees,

advertising fees, etc.—but also the productivity lost during the replacement process as well as

training new employees. U.K. businesses average a 15 percent turnover rate across industries,

the sectors that face the highest rates are retailing, catering, call centres, construction, and

media.4

1 https://www.mercer.com/content/dam/mercer/attachments/global/webcasts/trends-and-drivers-of-workforce-turnover-results-from-mercers-2014-turnover-survey.pdf 2 http://www.telegraph.co.uk/finance/jobs/10657008/Replacing-staff-costs-British-businesses-4bn-each-year.html 3 https://recruitmentbuzz.co.uk/average-wage-uk-salary-earning-age/ 4 https://hiring.monster.co.uk/hr/hr-best-practices/workforce-management/employee-retention-strategies/what-is-the-ideal-employee-turnover-rate.aspx

The prime challenge for these industries, and similar ones where higher labour turnover rates

are common, is keeping replacement costs low while also ensuring that the processes for

onboarding and training new employees is effective. The faster a business can onboard and

train, the faster that employee becomes productive. Indeed, the largest portion of costs related

to replacing departed employees lie in the amount of time it takes for a new employee to reach

maximum productivity. Referring again to Oxford Economics, it takes approximately 28 weeks

for new employees to become productive. For this reason alone, it is now essential for

businesses to take every step they can to ensure employees stay longer as well as to find ways

to reduce onboarding and training times without losing productivity.

Why good employees leave (hint: it’s not only about money!)

In our highly competitive economy, it is essential for top HR personnel to understand the

underlying causes why workers leave jobs, particularly in positions that have a higher than

average turnover rate. While some of the reasons behind turnover are beyond a firm’s control—

workers moving away, major life changes or health challenges, etc.—the majority of workers

leave because of factors that are within the company’s control. Glassdoor, an online jobs and

recruiting marketplace, conducted a survey that found that while being underpaid was the most

common reason employees left, it was far from the only cause. Indeed, nearly 45 percent of all

survey respondents said that they left their last job because they needed a new challenge or the

work itself was boring. Nearly 20 percent said they didn’t approve of their supervisor, and 14

percent said they didn’t like the company culture.5 And even the top reason (too low a salary)

may not even be the chief motivator to leave; a study discussed in the Harvard Business

Review found little correlation between salary and job satisfaction.6 In other words, simply

throwing money at employees is not likely to keep retention rates down. Instead, employee

engagement is likely the key to improving not only retention metrics but also productivity.

What does employee engagement mean? There are many definitions, but as many

experts point out, it’s not a measure of happiness or satisfaction. Rather, engagement has more

to do with employees’ emotional relationship to their employer and their job, and how that state

incites them to work towards a company’s goals.7 An engaged employee has a higher level of

commitment to their job and their employer, is passionate about their work, understands the

company’s goals and their role in meeting them, and pro-actively works towards fulfilling those

goals.8 Moreover, engaged employees have productivity rates that are 70 percent higher than

those of non-engaged workers. They also enjoy a 78 percent higher safety record, 70 percent

lower employee turnover, 86 percent greater customer satisfaction, and 44 percent greater

profitability.

In the U.K., engagement rates appear to be stagnant. According to research firm ORC

International’s 7th annual Global Perspectives survey, employee engagement in the U.K.

5 http://www.onrec.com/news/statistics-and-trends/salary-job-tenure-boring-work-top-reasons-uk-employees-resign 6 https://hbr.org/2013/04/does-money-really-affect-motiv 7 https://www.forbes.com/sites/kevinkruse/2012/06/22/employee-engagement-what-and-why/#6033df2b7f37 8 http://www.emptrust.com/blog/employee-engagement-a-key-hr-strategy

hovered at 58 percent between 2015 and 2016. And while that may seem to represent a

majority of workers, the survey also found that approximately 20 percent of employees would

not recommend their employer as a place to work, while the percentage of workers feel they are

forced to work beyond what is normally required.9 Similarly, research by Kronos and the

Workforce Institute found that 60 percent of employees cited not feeling valued the key factor

when considering resignation.10 That is to say that while engagement appears to be at a decent

level, there are enough unengaged employees in the U.K. who’s level of disconnectedness and

lack of engagement can greatly undermine an organisation’s productivity.

In the past 25 years or so, the main channel that employers have used to communicate,

train, and engage employees is through the desktop computer. That is, significant resources

have been put towards developing and deploying online training resources, communications

resources, and other digital products that workers who primarily use computers in their day-to-

day work can easily access. This is not the case, however, for workers who do not use

computers, such as workers in manufacturing, retail, transport and other similar industries. And

evidence suggests that employee engagement issues are deepest, coincidentally, in these

types of industries. One study by market research firm Forrester found that while most

employers cite employee engagement as a priority, only 32 percent of employees actually feel

engaged. While the report focused more on employment in digitally-focused businesses, it did

recommend organisations review how they manage “recognition, development, flexible work

schedules, employee well-being, self-service mobile access to benefits and other programs that

rate high with workers.”11 In manufacturing, which typically faces high turnover rates, research

firm Gallup found that only 25 percent of all employees are considered engaged.12 Add in

employee concerns around Brexit and employment levels, which only seem to be exacerbating

feelings of disengagement among workers, and it should be clear that increasing employee

engagement should be top of mind for any business that wants to remain competitive in the

long-term.

9 https://orcinternational.com/thank-you/global-perspectives-2016-makes-winning-workplace/ 10 http://www.manufacturingglobal.com/people-and-skills/increasing-employee-engagement-manufacturing 11 https://www.hrdive.com/news/forrester-companies-will-pay-20-more-for-in-demand-tech-talent-in-2018/510558/ 12 http://news.gallup.com/businessjournal/218549/keys-boosting-workplace-culture-manufacturing.aspx

The key challenge for employers in industries where workers don’t typically use

computers is to find ways to connect employees to their organisation. Yet, this is an area where

companies have not traditionally excelled. In its Global Human Capital Trends survey, Deloitte

found that while nearly 80 percent of executives rated employee experience as very important

or important, only 22 percent said that their companies were competent at offering an engaging

employee experience.13 So how can employers create a work environment where employees

feel engaged, particularly in sectors where communication is a challenge?

13 https://dupress.deloitte.com/dup-us-en/focus/human-capital-trends/2017/improving-the-employee-experience-culture-engagement.html?id=gx:2el:3dc:dup3820:awa:cons:hct17&_ga=2.83384918.1513786550.1510221020-1117368435.1506022156

Connecting unconnected employees

The answer to that question likely lies in technology, specifically smartphones. There are

more than 43 million smartphone users in the U.K., about two-thirds of all U.K. citizens. Among

adults, smartphone penetration is well above 80 percent and is expected to continue to rise.14

With such widespread adoption, smartphones can play a revolutionary role in engaging

employees.

A natural communications centre, workers who may not have access to a company

email or intranet are likely accustomed to sending and receiving communications through their

mobile device. That could be in the form of one-to-one messaging, from manager to direct

report, but can also be a place where employees receive company news, memos, and other

tidbits through a newsfeed function. What’s more, communication doesn’t have to be one-way,

as a smartphone app can allow employees to anonymously submit feedback, raise issues, etc.

This is a highly efficient channel for making communication a two-way street without employees

feeling put on the spot. Additionally, smartphone app can provide a platform for employers to

regularly survey their workers, and for workers to submit ideas.

But we can take this concept even further. Smartphones can be used to provide day-to-

day or longer-term objectives that are clear and consistent. And employees can easily check off

what they’ve accomplished without having to report directly back to a supervisor. Workers can

also use an app to complete timesheets. From a management perspective, all this data can flow

into a dashboard to track both real-time and longer-term productivity and engagement metrics.

Lastly, a mobile application can be an excellent channel for providing training, even to

employees who haven’t even started their jobs. This can help employees feel like they are part

of a firm upon hire, and not several weeks later when they actually start. Moreover, by providing

training through a mobile app, new employees can get up to speed faster while more seasoned

employees can access information and training that will help them gain more skills, improve in

their jobs, and potentially achieve higher status within the company.

14 https://www.deloitte.co.uk/mobileuk/themes/smartphone-adoption-stable-and-strengthening/

Conclusion

Ultimately, the goal of improving retention rates should be the focus of any business that

wants to grow and compete in the global economy. Employee engagement, particularly in

industries with high turnover and where employees are not already digitally connected through

their jobs, is integral to reducing turnover. By providing a mobile platform for employees to feel

connected, understand and achieve company objectives, and receive the training and

information they need to excel in their positions, businesses can find a highly efficient and

effective means to improve employee engagement. And by improving engagement, and thus

retention, it’s quite likely that businesses will improve productivity and profitability, with the

platform paying for itself several times over.

About StaffCircle

StaffCircle’s mission is to improve and empower workers and managers at all levels. StaffCircle

provides a staff experience platform which digitises sentiment, communication, training, ideas,

tasks and directory and delivers it to staff via the smartphone in their pocket. This reduces staff

attrition and creates greater employee engagement, empowerment and productivity.