Job turnover costs UK billions annually

News Article - 25 October 2010
Category: Business

According to new research from accountancy firm PricewaterhouseCoopers (PwC), UK businesses are losing £42bn a year because of a widespread failure to retain staff with key talents.

The PwC survey found that almost a quarter of UK employees are either actively seeking a new job or plan to do so in the near future because of unhappiness regarding expected pay and conditions over the next 12 months.

Across the UK, 10.4 per cent of workers quit every year in favour of another position. This is higher than average in other countries including France and Germany (5 per cent) and the United States (7 per cent).

The PwC survey argues the economy could be £42bn better off if UK businesses invested more heavily in employee retention. Taking an average salary of £25,000, a 1 per cent rise in resignation rates will increase costs to businesses by £8bn. Replacing lost workers is very expensive, equating to a full year of the lost employee's salary. This covers the cost of lost skills and productivity in addition to recruiting and training a replacement.

Yet firms are unlikely to make up the £42bn shortfall if the current rate of investment in staff retention continues. Many firms are putting in less effort than in previous years. In 2009, 54 per cent claimed to have a special focus on retention which has subsequently fallen to 36 per cent for 2010.

Whilst many employees remained with their current employer during the economic downturn, many are now on the look out for new positions and opportunities. Businesses must be wary of this and understand that resignations are likely to increase in the short to medium-term.

Firms must consider the relative impact of employee benefits such as pay rises and not assume they are negative for the long-term financial health of the company: losing key talent can be more damaging.

Access business software provides companies with tools to more easily work out the true costs of retaining and losing staff. Cashflow forecasting allows companies to analyse the effects of resignations on long-term financial health by running detailed 'what if' scenarios. The reports generated can be then be delivered automatically in Excel format.

For more information, please call Access on 0845 345 3300.

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