Efficiency, Productivity, Lower Turnover Costs: The ROI Of Employee Reviews
By Robyn Porter, Human Resources Manager & Consultant, HTG Peer Groups
In my last post I spoke about the need to have quarterly “un-reviews” and why they can be an effective and useful tool in managing your employees. I also mentioned that annual reviews are an equally important part of any organization’s performance management strategy. From increased employee satisfaction to an increased bottom line, properly executed reviews can absolutely be utilized to maximize your return on investment.
You Can Save $$ Through Efficiency
Businesses are running leaner than ever, and SMBs are no exception. Employees are asked to wear “multiple hats” and do whatever it takes to get the job done, resulting in blurred lines when it comes to their daily duties and responsibilities. The result? Employees are performing tasks which are not their highest and best use of time, and often their managers are completely oblivious. Taking time to sit down yearly enables focus on daily tasks and identifies areas of inefficiency in the organization.
You Can Save $$ Through Increased Productivity
We’ve all been hearing a lot of talk lately about employee engagement. And given the statistics around engagement, it’s no wonder. In fact, Officevibe.com put together a handy employee engagement ROI calculator, and the numbers can be staggering with regard to productivity. For a company of just 45 employees, disengagement can cost upwards of $147,375 annually. That’s just in lost productivity. How can your employees truly feel engaged if you aren’t following up with them on a regular basis?
You Can Save $$ On Turnover Costs. How do you calculate turnover in your company? Have you taken the time to quantify it? Some numbers indicate it costs you 20 percent of your employee’s salary to replace them, and that stat doesn’t begin to take into account the “soft” costs such as employee morale. Turnover is like a cancer in your organization, one which spreads into every aspect of your org chart and your P&L. A recent infographic in The Huffington Post illustrates the highly distressing percentages of American employees who are disengaged. I wonder what percentage of those employees have regular check-ins and meaningful reviews with their bosses. One thing is clear: Employee disengagement leads to high turnover which leads to lower profit margins. Boost their engagement, and you boost the ROI of your review process.
You Can Save $$ On Attorney’s Fees. Not conducting annual reviews can be costly. The U.S. Equal Employment Opportunity Commission (EEOC) reports that 6 out of 10 employers have faced an employee lawsuit in the last 5 years, and studies show those are a usually a result of management simply not being in touch with staff. Throw in agency audits resulting from non-compliance due to improper or non-existent performance management processes, and the attorney’s fees quickly begin to add up. If only employers would start with the basics (like a well-crafted job description, followed by annual reviews) they would save themselves and their organization money, and their team’s time and frustration.
The keys to maximizing the ROI in your employee review process are very simple. With proper planning, execution, consistency, and branding of that process, your organization will soon see that it was an investment worth making!
Want to attempt to Stump the HR Lady? Submit a question for Robyn to answer in a future column to rporter@htgpeergroups.com.
Robyn Porter is a Human Resources Manager of 20+ years and Consultant with HTG Peer Groups. Her background includes the IT, Hospitality, Distribution, Entertainment and Gaming industries, and from operations to ownership to corporate human resources. Her passion lies in the SMB space helping businesses to maximize HR processes and successfully navigate the challenges. You can reach her at rporter@htgpeergroups.com or find her on LinkedIn or Twitter at @RobynTheHRLady.
About HTG Peer Groups. HTG Peer Groups is an international organization of leading IT solution providers with nearly 300 member companies. In everything they do, whether running peer groups, coaching, or consulting with clients, the HTG team looks to make a positive difference in the lives and businesses of those they serve. Visit www.htgpeergroups.com or call 712-794-7994 for more information.