Every day across the U.S., tens of thousands of employees are being hired or fired. While each of these is either a triumph or a tragedy on its own, the numbers make up some rather fascinating statistics that employers and hiring managers should be aware of. Here are the top ten you should keep in mind as you build your HR strategy.
1. Firing an employee can cost employers up to 200% of the employee’s annual pay
Exiting an employee from your company is hard for the employee—and for your business. While you’re working to backfill the open role, you’re incurring costs to hire a new team member in the form of both hard and fixed costs, like interviewing time, training, and (potentially) recruiter fees.
With a vacated position, you’re also paying the cost of lowered productivity. Once you make the hire, you’re not in the clear yet. Your new hire will also need time to reach the same level of productivity as the previous employee, who may have had months or years of experience in their role to build up their proficiency.
An often forgotten cost of letting an employee go is social capital. Relationships between employees take time to build and impact your team’s productivity. It’s important for your team to understand each other’s personalities and working styles, and that doesn’t happen overnight. Your team will need time to build trust and rapport.
So, how much do these costs add up to? It depends on the seniority and pay grade. The cost of replacing an employee who earns less than $30,000 a year starts at 16% of their annual pay. To backfill a more senior employee, you could be paying up to 213%.
2. An employee lawsuit can cost companies more than $100,000
Wrongful termination can lead to some expensive lawsuits if the employee is inclined to pursue legal recourse. For reference, the average settlement costs in California is $40,000 but can range from $5,000 to more than $100,000 depending on the situation. And this doesn’t include additional fees such as punitive damages, attorney and court fees, and other compensatory damages.
The costs don’t stop there. If the employee has a lawyer, the attorney can expect to receive compensation (via settlement or award) 64% of the time. With sky-high costs like this, it’s incredibly important to do everything by the book when deciding to let an employee go.
3. Nearly 23% of new hires leave before their first anniversary
Most companies carefully interview and vet candidates before hiring them, but it’s often hard to detect whether or not the new hire will find success or not. A staggering 23% of new hires turnover before their first anniversary, while 46% of all new hires fail before 18 months.
“Fail” here is a broad word to describe not performing to expectations, which generally leads to either discipline or a firing. This could also be that the company didn’t provide adequate training or onboarding. Or it could be that…
4. 78% of job seekers lie during the hiring process
Candidates are likely to oversell their abilities to secure a job offer, and findings have shown that 78% of candidates lie on their resumes to set themselves apart from others. Some of these include having a mastery of skills they may not have (such as Excel or a foreign language), having a higher GPA, working at a company longer than they did, or even earning a degree from a prestigious university (when all they did was take a class online).
While hiring managers may be willing to overlook some of these lies because they don’t prevent the employee from fulfilling the role’s requirements, lying on a resume could also have serious consequences. When a candidate lies about their college degree or is unable to perform to the standards of the job, the term of employment is often short.
5. 96% of HR and hiring professionals believe that employee experience is important
Gone are the days where employees conform to what employers need. Now, organizations are expected to understand and invest in their workers to create a better working experience. In fact, 96% of HR and hiring professionals surveyed for LinkedIn's Global Talent Trends report believe that employee experience is becoming more important.
Today, organizations are elevating the employee experience by focusing on compensation and benefits, management strategies, and even employee training. They’re also gathering insights about what their employees want and need the most.
6. 81% of talent professionals agree virtual recruiting will continue
Virtual hiring is on the rise, especially with Covid-19 drastically changing the way organizations run and work. Today, 81% of recruiters agree that virtual recruiting will continue post-Covid-19, while 70% say that virtual recruiting will become the new standard.
Candidates can expect fully virtual recruitment and onboarding processes, while businesses are left to develop engaging ways to onboard their employees as seamlessly as possible. From text message recruiting to video interviews and even mobile onboarding, technology is the future of recruiting—and it’s likely here to stay.
7. Turnover rate is at 144% for fast-food restaurants
The turnover rate for QSRs is astonishingly high, which has increased from 135% two years ago to 144%. To put this into context, a restaurant with 30 staff will have 43 people leaving in a single month.
This puts the spotlight on hiring effectively and understanding the needs of employees to reduce turnover rates. There may also be a need to look into creative recruitment strategies to hire quickly, and digitalization to ensure that your organization continues to be attractive to candidates.
8. 51% view internal mobility as a priority
A LinkedIn report highlighted another good way to increase employee retention: hire internally. Promoting from within, or allowing an employee to move laterally into a new role, has a positive impact on an employee’s tenure with the company. It shows that you value them and reinforces that there is room for growth. This is critically important because one of the top-cited reasons why employees leave their job is the lack of opportunities to advance.
This benefit is becoming more widely known as “internal hiring” and has increased 10% since 2015. Employees are staying two times longer at companies with high internal mobility, and 51% of learning and development pros also see internal mobility as more of a priority now compared to pre-Covid-19. It’s also cheaper to find talent already in-house than to go recruiting.
9. 39% of workers would consider quitting if they had to work in the office full time
Remote work may or may not be the new norm. The ruling is still out. Reports have shown that 35% of people were working from home in May 2020, but this was reduced by more than half in June this year to 14%.
However, another survey shows that 39% of workers would consider quitting should there not be flexibility on work from home arrangements. As more people get used to working from home, returning to the office may seem like a hassle. Organizations will have to take this into consideration when planning working arrangements, and slowly easing employees back into the office may be one of the solutions.
10. 92% of companies use social media to look up candidates
The majority of companies are casting their applicant nets by using the wide reach of social media. After all, candidates today spend a lot of time on various social platforms, so promoting jobs there increases the likelihood of qualified applicants seeing the job posting. Consider the use of platforms such as Twitter or even TikTok depending on the target profile of potential applicants.
Social media profiles are also a way to screen candidates. In fact, 70% of recruiters check candidate profiles before extending an offer.
Not sure how to use these statistics to your benefit? We're here to help. Schedule a call with us to find out how!