NATIONWIDE, the world’s largest mutual insurance and financial services company, has today revealed that talent waste costs the company £100,000 for every percentage point of turnover, Jon Hull, Head of Resourcing Delivery at Nationwide Building Society said recently on the Talent Waste Podcast.
The fortnightly podcast is hosted by Lee McQueen, a British entrepreneur, Founder and CEO of Phoenix51 and winner of series four of the UK version of the reality show The Apprentice, who is on a mission to find out whether or not Talent Waste exists and how much it really costs organisations.
By talking to industry experts and leaders, McQueen hopes to reveal the full extent of Talent Waste affecting all organisations across all industries. It occurs when an employee leaves an organisation prematurely due to the business not being able to retain them.
With figures from the Office of National Statistics revealing that between 30% and 45% of employees leave an organisation within the first year of employment, together with Glassdoor finding that the average cost of employee turnover, based on the average UK salary, is around £11,000 per person, with the costs to replace senior staff members anywhere between £40,000 – £100,000, the figures Nationwide have reported shows talent waste could be far greater than the research indicates.
Nationwide’s reported turnover for 2020 is £3.8bn, according to their annual report. With talent waste somewhere in the region of £380M a year.
“The contact centre was a little bit on fire when I joined; turnover was poor and recruitment was poor in terms of fulfilment. Our finance teams worked on it, and for every percentage point of turnover cost the business £100,000 to the bottom line,” said Hull.
“But by driving better recruitment and fulfilment, you can cut that cost, turnover did drop, engagement went up,” he added.
McQueen added: “With 1% equalling £100,000 worth of bottom line cost, that is an incredible stat. The ONS states that in the financial services industry, businesses could experience up to 45% staff turnover in year one. So if you’re hiring 100 people in year one, you’re going to lose 45, once you put a cost around that based on the analysis in Nationwide that is astronomical, you’re talking serious numbers from a cost perspective. And then you’ve still got a layer in, hidden costs and impact on morale.”
As well as touching on the impact of the pandemic at Nationwide, Hull stated: “More and more increasingly, especially since through Covid, we’ve found that our current employees are the greatest asset and that idea of waste and lack of mobility and choice for those individuals is key and you could be unwittingly losing talent because you haven’t thought about how that talent thinks, moves and lives really,” added Hull.
Hull goes on to share the three things he implemented to turn the results around and lower the cost of Talent Waste at Nationwide, these included;
- Reviewing the Recruitment Process Outsourcing (RPO), including the contract and what the RPO is measured on – ideally that should be fulfilment and quality, for longer than 90 day attrition. Whether you handle it In-house or via RPO – make sure you get your operational measures right and don’t negotiate on them
- Work with the business – help define out career paths as part of the EVP, to give people aspiration
- Ultimately work with operations to build confidence. Take small steps, implement rigorous communication and take feedback from your employees.
Talent Waste can be significantly reduced by hiring talent aligned to your organisation’s culture, values and skills. A structured assessment and development model will ensure staff are motivated and productive, leading to increased productivity and retention.
