Retention and the Ripple Effect - The Audit Workshop part 6

Retention and the Ripple Effect

Audit Workshop Part 6

Run time 10 minutes

What is the cost of losing one employee?

When one team member leaves, it’s not just about filling the position. 

The ripple effect can lead to increased stress, burnout, and even more resignations. 

Did you know that replacing an employee can cost upwards of £30,000? But the hidden costs can push that total to £90,000 or more when you consider lost productivity and morale.

Understanding retention is crucial for your organization’s health. 
Ask yourself: how many departures triggered a ripple effect in your team? 

This simple exercise can reveal retention problems that are far more costly than you think.  

Remember, retention isn’t just about hiring; it’s about creating an environment where people want to stay.

#retention #rippleeffect #replacementcost #corporatefinance

Transcript

SPEAKER_00 0:00

They should stay themselves. Knowledge walks out the door, processes, relationships, an unwritten know-how that the new hire won't gain for months. Other people start thinking about leaving. Uncovered. Now in the last two episodes, we looked at absenteeism and sickness, the visible drains you can see on the timesheet. Today we turn to something even more expensive and often very underestimated. That's retention and the ripple effect. Now, if one person leaves, it costs around 30,000 to replace them. But what happens to the rest of the team when the real money disappears?

SPEAKER_01 1:19

So let's unpack why one departure rarely stays as one departure.

SPEAKER_00 1:30

Now retention is your organization's ability to keep the people you've already invested in. When someone leaves, the most obvious cost is the direct replacement fee. Recruitment advertising, interviews, onboarding, and the lost productivity while that role lies empty. Now current UK research puts the average cost of replacing one employee at 30,000 to 30,614. Now that figure already includes you know, details of there, productivity loss, but in reality this number is almost always the minimum and not the true total cost. The bigger and more dangerous cost is what happens next.

SPEAKER_01 2:17

The ripple effect. So let's go more into that.

SPEAKER_00 2:25

Now when one person leaves, especially in smaller teams, or when the lever was well liked or highly skilled, several things tend to happen. The remaining team members absorb the extra workload, leading to increased stress and burnout. Morale drops as people question to why that person left and whether or not they should stay themselves. Knowledge walks out the door, processes, relationships, and unwritten know-how that the new hire won't gain for months. Other people start thinking about leaving. Research consistently shows that a one departure ph can trigger others, especially if the reason for leaving was down to poor management, lack of support, or the feeling of being undervalued. This ripple effect is why many organizations find that the true cost of a single resignation is often two to three times the headline replacement figure. And in some cases, particularly in small teams or specialist roles, it can be even higher. The ripple doesn't just affect the headcount, it also affects the people who stay. Increased pressure on remaining staffed often leads to higher sickness absences and presenteism. So let's see that you lose one mid-level employee with a £45,000 salary. Now the direct cost is around £30,000 to £32,000. But now let's add in the ripple. Now two to three colleagues each lose productivity time supporting the gap or training the new employee. One more person becomes disengaged and starts looking elsewhere.

SPEAKER_01 4:41

Management time is diverted to recruitment and firefighting instead of growth.

SPEAKER_00 4:49

In many real organizations, this easily pushes the total cost of that one departure to 60 to 90,000 or more when you properly account for the loss of momentum and the risk of further resignations. This is why simply replacing people is rarely the answer. You have to understand why they are leaving and what the impact is their departure will have on the rest of the team.

SPEAKER_01 5:25

So here's your practical takeaway from today. Now take your last 12 months of leavers and answer these two questions.

SPEAKER_00 5:38

How many people left in total? And looking back, did any of those departures trigger further problems, such as increased sickness, extra pressure on the team, or more people leaving shortly afterwards? Now even though it's a rough estimate, it is incredibly valuable. Write down the number of levers and add a note about any visible ripple that you absorbed observed even. This simple exercise often reveals that your retention problem is bigger and more expensive than the raw turnover numbers suggest. You now understand why retention is never just about the cost of hiring someone new. The ripple effect is where the real financial damage often hides. Now, as we go into the next episode, we're going to be looking at your estimated yearly costs and how all these hidden costs stack up against your revenue and benchmarks. And obviously, if you do want us to run you a full diagnostic of your organization using your numbers, send us a little email or a message and mention the audit and say we would like to have a talk. Now I know this one has been um a lot of these are quite short, and a lot of these are short on purpose because they're practical and you're adding them against ones you've previously done. It's about just putting your information together, very quick, simple tasks to get all your details, all your data together. I'd love to know what you're thinking of these uh these audit ones and everything. When I do when the academy's up and running, which I'm I'm on the I'm on, I'm on it, I'm on it. When the academy is uh up and running, these courses will be a lot longer. These are just little introductions into each section just to give you a basic idea of what they all mean. And then when we do the course, the actual there'll be a full course for the uh for the audit where it has everything in there, you can do it as one big, big, big piece of course, or you can break it down into little small courses like these sort of um episodes, but there'll be a little bit more meat on the bone because these are just basics uh and everything just to get you started. The ripple effect is one of my favorites, actually, of uh of all of the bits of information because it's one of the things that people don't regularly see. They look at it as like, well, we've just got one person. You see companies where they just go, Well, if you don't want the job, you just leave, it's fine, we'll replace you easily. And and but that's naivety, it is sort of like, well, we can replace them, but if that person's been there a while and they have a lot of experience and they understand the job and the people, you know, the knock-on effect of losing those additional people, and then training other people and taking people away from the other jobs that can be doing stuff while you're training them up and everything. Knock-on effects massive. We've talked about it previously. You replace you replace Bob with about five Michaels and it makes no difference, you know. And then like other people start leaving left, right, and centre, and that knock-on effect, it's now cost you £150,000, and you're left with people that aren't as good and and things. So, you know, the Ripple effect has a massive impact on that, and it's not a one that a lot of people see, but once you understand it, and a lot of these ones with the audits and everything, once you understand the numbers behind everything, you are more well more um inclined to be able to work out your business figures a lot easier and work out where your drains are and work out where to uh plug gaps and things like that, to improve business massive, massively. And that's what it is all about. It is all about understanding the business from the uh from the bottom up. So again, a very short episode this one. Uh we're gonna be getting back to the end of diabetes in our next episode. Then we're gonna be doing a I'm filming a couple of them today, so I'm filming the audit obviously, and I'll be filming the next uh diabetes one and we'll and uh a bit of a heads up for this one. Our next behind the edge is gonna be on grazing and everything. So that there we go, they're the three that I am doing today and everything, and all these will be out. I'm gonna start putting trailers in as well so you can have an idea of what's coming in as well. So I really appreciate it. If you've uh enjoyed these, please do send me a message, let me know what you think. Is there anything you would like adding in? Is there additional stuff that you would like more to more of uh on that? That would be fantastic. And remember that illness is not a burden, it is information, so use it to unleash the edge in your career, your business, and your life.

SPEAKER_01 10:26

I've been Elliot Evans. I'll see you on the other side.