The Employee Engagement/Retention Equation

The True Cost of a Transient Workforce and How to Minimize it

One of the top priorities for businesses in 2018 is to increase their employee retention rate. In fact, 87% of HR leaders stated that employee retention is a critical priority for their organization. Most organizations understand and accept that having a high performance workforce is essential for survival and growth, and this can only be done with an engaged and productive workforce.

Employee retention is increasingly important to organizations as the current job market is growing at a rate that outpaces the frequency that positions can be filled. Additionally, the Baby Boomer generation of workers has begun entering into retirement marking the departure of skills and experience that is difficult to replace.


The growing saturation of job opportunities in the market simultaneously stimulates the growth of a more transient workforce and gig culture while presenting a lack of talent and skills for more specialized and specific roles. 65% of recruiters have found that talent shortages are the main obstacle in filling positions.

According to a Kronos survey, they found that nearly half of 1,400 workers across industries had 2-3 jobs over the course of 10 years making it harder and more important to attract and retain the right talent. This is thought to be because millennials are younger, more mobile, better connected and have less obligations that hold them back. This has huge implications on the job market as millennials now make up the largest sector of the US workforce. Their mobile nature will drive a drop in retention and play a dominant role in emerging and prevailing workforce habits.

According to Gallup, 60% are open to different job opportunities than the one they are in now and that only 29% of millennials are engaged at work and 55% being disengaged. The turnover rate due to lack of engagement is expected to cost the US economy an estimated $30.5 billion annually.

The cost to replace an employee within a company seems to vary based on the role and wage of the individual. For employees earning:

  • Under $30,000 per year, it costs an average of 16% of their annual salary
  • $30,000 – $50,000 salaries tend to have a cost of around 20% of the annual salary
  • Executive positions, especially upwards of $100,000 have a disproportionate cost of replacing, costing up to 213% of their annual salary


While costs are high, they do not represent the true cost of employee turnover as figures don’t represent the whole or intangible costs that often arise from an employee’s departure. For example, some costs that cannot necessarily be measured are:

  • Onboarding a new employee: This includes training and the cost of time management spends on the new employee. Training often covering 10-20% or more of a new employee’s salary.
  • Ongoing loss of productivity: New employees can take 1-2 years to achieve the productivity rates of currently existing employees and take time to gain the skill sets that were lost in the departure of previous employees.
  • Reduction in engagement: High turnover can disengage exiting employees and corrode camaraderie.
  • Increase of human error: New employees are often learning which means mistakes are more common and take time to correct. Mistakes can also cause collateral damage to customer service, reputation and other employee’s engagement.
  • Impact on work culture: The departure and arrival of a new employee can affect the working dynamics and relationships of your team. Bad fits can have detrimental effects and good fits can take time to settle in. Departures of valued members can have a knock on effect and cause other to question if they want to stay.


It’s no secret that employee engagement has a direct correlation with customer retention. People are the differentiating factor between competitors and the right people with the right skills better position your business to stand out from the crowd. Retention and engagement of skilled staff leads to consistently higher levels of work and service being delivered. Without them, it’s harder to build personal relationships with clients/customers and maintain their trust.

So, the billion dollar question is: How do you motivate and retain intelligent, creative individuals who are able to move to rivals in a global market where the rewards are high?

  • Flexibility
    Meeting the needs of your customer base and business needs are essential, but so are meeting the varied needs of your workforce. Aligning a flexible workforce to your customer demand will help to control costs, but couple that with meeting your employees’ needs will maximize performance.Flexibility also provides a means to tackle employee burnout. A Kronos study revealed that 46% of HR leaders hold burnout responsible for up to half of their annual workforce turnover. An effective means of developing a more flexible and dynamic workforce is by implementing cloud based scheduling software into the scheduling and employee management process.
  • Invest in training
    Most millennials switch jobs in search for opportunities to develop and build on their strengths to give them an edge in their careers. Continual training helps to give them purpose and reason to be an engaged and a productive member of the company.Assigning tasks suitable for an employee’s skill level and paygrade helps exhibit their value to the company while maximizing productivity at the minimum cost. While making use of their skills, encouraging innovation can help them apply their knowledge and talents to the companies benefit while stimulating and engaging employees mentally. 46% of employees searching for new jobs stems from boredom their current roles.
  • Provide opportunities
    Employees, especially millennials, are more engaged, productive and cooperative when there is opportunity for growth, promotion or transitions between roles in a company. They provide the new challenges and stimulation that can build or take advantage of their strengths.


    When an employee is promoted or makes a transition between job roles and a pay rise is involved, the additional cost of employment must be covered by an increase of productivity in order to be viable. Automating repetitive processes that eat into time and allocating employees to more productive tasks will help in increase engagement while enriching their sense of purpose within the company.

  • Greater communication
    The Harvard Business Review reported that effective communications is the second most important factor to bringing business success, second only to customer service. Not only is key for sharing business objectives and targets, but it’s also a key method in gaining insights into how processes and services can be improved.Opening a two-way channel of communications allows for open, ongoing dialogues between other members of staff and management. Millennials seek instant and constructive feedback – it’s the type of communication that they’re familiar with. Although they want the conversation to be both ways where they can also be heard which will help establish and build trusting relationships that harness mutual respect. Annual reviews no longer work and the traditional boss role no longer fits. They look for a boss that can value them as an employee and a person that can act as a mentor for developing and building their skills. As it currently stands, Kronos has identified that only 21% of employees feel their seniors value them which can lead to an undermining of their purpose in a company.
  • Recognition of performance
    Pairing with increased communications is the need to recognize their performance. As mentioned, annual reviews no longer work, immediate and direct feedback needs to be given.Millennials continually ask themselves “Does my employer value my skills and contribution?” Showing that you do is critical for retention, ongoing monitoring of employees performance and celebrations of exceptional performance and achievements shows their work hasn’t gone unnoticed and through suitable compensation and rewards their sense of value will be reinforced. Additionally, it will also drive an increase of motivation and engagement in their work.
  • Fairness in the workplace
    Fairness comes in three main forms in the workplace: treatment, payment and opportunity. Fair payment for the work provided in a timely and accurate manner while clearly stating what they have been paid for and why helps to establish trust and transparency.While amongst employees, there may be some who are better at tasks than others, yet it’s important to provide equal opportunities and chances for progression and overtime without favoring particular individuals. Failure to do so will quickly corrode trust between management and employees, as well as develop resentment amongst the employees themselves. Although opportunities should only be presented to those individuals that match the experience and skills required for these tasks.
  • Empowerment and self-dependence
    Developing open communications offers opportunities for innovation. In most industries, employees are the frontline staff that interact with the customer and/or are dealing with the daily functions of the business. This gives them a wealth of insight that management often lacks. Empowering employees to speak up, share their opinions and make suggestions for improvements encourages engagement but also demonstrates the value of their opinion in the search for business development. Within business operations allow them to work independently or in teams and self-manage their workloads while communicating with management.A Global Study by EY found that 74% of employees want the ability to work flexibly in order to work at their most productive times while providing an optimum work-life balance.

    Working from home or allowing employees to self-manage shifts, shift swaps or select open shifts can increase the level of trust and respect and employees return in kind with strong engagement and higher levels of productivity.


A common premise followed by most, is that to have happy customers, you need to have happy employees.

The millennial workforce is an experiential workforce. They seek jobs that accommodate their needs, provide value and fulfilment for them while delivering a sense of purpose. If employees show signs of disengagement, it’s a sign of their needs not being met. In order to prevent that we need to develop a company culture that nurtures not only transparency, trust and respect but also a reason to be engaged.

Giving reasons for engagement like increasing pay, expanding benefits and offering additional training and opportunities are some of the ways that can promote engagement and retention.

Another effective means of retention is by implementing a suitable employee scheduling and management application like Ximble.

Supplying a level of flexibility that satisfies employees without sacrificing the business’s operations can be challenging. Scheduling apps have the ability to promote self-management and provide a more flexible means of shift management.

Open shifts and self-managing shift swaps help to demonstrate a level of trust and respect among your employees while simultaneously delivering a means to have more control over their work-life balance.

Ultimately management still has the ability to refuse requests for open shifts and shift swaps to ensure fair treatment, prevent abuse of these functions and ensure the needs of the business are being consistently met.

Increasing open dialogs has been noted as the second most important factor for business success. Using a built in chat platform that allows instant communications and transferring of files between employees, departments and management creates a more informed and coherent workforce while also making other departments and conversations with management more readily available.

Feedback on performance and tasks can be delivered instantly from management or other superiors rather than delivering it on an annual basis. Employees can open dialogs with management and take the initiative by requesting for training and development opportunities or to voice concerns or suggestions for improvements in business operations.

While providing an excellent means to gain business operational insights, by using the information your employees provide to open discussions for improvements or resolve issues shows their input is being heard and valued.

Creating a balance of consistency and personalization of employee workloads and schedules that are in sync with your businesses objectives will help to ensure that employees feel challenged and appreciated. By utilizing the appropriate technology to manage that flexibility and channels of communication will help management maintain their own, and empower staff to proactively attain a healthier work-life balance while developing a working environment that supports transparency, trust and respect across all members and levels of staff leading to a more productive and engaged workforce.

About the author

Matthew Hughes - Content Writer

Matthew Hughes is a British-born content writer with the mindset of a cat, he has a curiosity for the unknown, can be impulsive and can be won over with food. The best place to catch him will be in the offices of Ximble, a dynamic cloud-based workforce management system that simplifies employee scheduling, time tracking and management. He also hates Sudoku.

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