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Measuring the Costs of Employee Turnover

Best-selling business management author Jim Collins was asked during a 2001 interview if he had identified a good business response to the economic slowdown that had gripped the nation. His widely quoted answer is as relevant today as it was at the time:

 

“If I were running a company today, I would have one priority above all others: to acquire as many of the best people as I could [because] the single biggest constraint on the success of my organization is the ability to get and to hang on to enough of the right people.”

 

Nearly 20 years later and in a highly improved economic climate, Collins’ words still encapsulate the biggest challenge facing HR departments of corporate giants and small start-ups alike: finding and retaining quality team members. In an era of competitive recruitment and job-hopping staff, your company risks losing monetary and human capital each time a valued employee chooses to leave. Employee turnover impacts your bottom line and your company’s culture. To set wise employee retention policies, you first need to assess the costs of staff turnover accurately and measure the full impact of employee loss.

 

Direct Costs of Replacing Employees

A talented employee exiting your company costs you money. Estimates of how much employee turnover costs can vary by industry and employee salary. A study by Employee Benefit News estimates the direct cost to hire and train a replacement employee equal or exceed 33% of a worker’s annual salary ($15,000 for a worker earning a median salary of $45,000). Cost estimates are based on calculatable expenses like these:

  • HR exit interview & paperwork
  • Benefit payouts owed to the employee
  • Job advertising, new candidate screening & interviewing
  • Employee onboarding costs
  • On-the-job training & supervision

You can track the expenses of your company’s employee turnover using this online calculator, or create a spreadsheet to determine how actual costs add up to affect your bottom line.

 

Full Impact of Employee Loss

Josh Bersin, a human resource researcher, writing for LinkedIn, refers to employees as a business’s “appreciating assets.” Good employees grow in value as they learn systems, understand products and integrate into their teams. When one of these valuable employees leaves, the business loses more than just the cost of hiring and training a replacement. Bersin cites these additional factors contributing to the total cost of losing a productive employee:

  • Lost investment: A company typically spends 10 to 20% of an employee’s salary for training over two to three years.
  • Lost productivity: A new employee takes one to two years to reach the level of an exiting employee. Supervision by other team members also distracts those supervisors from their work—and lowers the team’s collective productivity.
  • Lost engagement: Other team members take note of employee turnover, ask “why?” and may disengage.
  • Less responsive, less effective customer service: New employees are less adept at solving customer problems satisfactorily.

 

According to Bersin, studies show the total cost of an employee’s loss may range from tens of thousands of dollars to 1.5 to 2 times that employee’s annual salary.

 

Strategies to Slow Employee Turnover Rates

An effective exit interview helps you and your HR team pinpoint the drivers of your company’s employee turnover. You may find that hiring practices need to be refined or employee engagement should be enhanced. Changes to the break room space, such as fresh fruit or games, will allow your employees to relax and come back to work with fresh eyes and a better attitude. This will keep up the workplace morale, shaping your company culture to include perks appealing to younger workers and will lead to increased job satisfaction. Today’s employees are career-oriented and highly motivated. Keep them on your team with other opportunities such as:

 

  • Pathway for advancement within the company
  • Professional development & advanced education
  • Flex-time & work-from-anywhere options
  • Management support & recognition
  • Lifestyle rewards or amenities like catering & concierge services
  • Culture of shared values & volunteerism

 

Add Student Loan Benefits Through ELFI

Student loan repayment tops the financial-worries checklist of many recent graduates. Older team members question their ability to pay for educating their children. New, highly desirable HR benefits like student loan contributions and financial literacy education are emerging from these employee concerns—and ELFI for Business is leading the way for employers to incorporate them into hiring packages. You can connect with ELFI directly from your HR portal and access multiple ways to contribute to employees’ student loan debt. We offer new-hire onboarding booklets, educational newsletters and onsite consultations filled with information for you and your employees. Reach out to us at 1.844.601.ELFI to add cutting-edge benefits to your HR employee package!

 

Learn More About ELFI for Business

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the web sites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

How Do You Become an Employer of Choice?

Is your company—the company everyone in your industry wants to work for or an “Employer of Choice?” Employers of choice consistently retain their highest performing employees and attract the best and the brightest over their competitors.  Employers of choice have little trouble recruiting talent since college graduates line up eagerly to interview for coveted jobs.

 

In today’s competitive labor market, the majority of companies do not qualify as employers of choice. Their workforces are in constant flux, and the cost of employee turnover is hurting the bottom line. Fortunately, that cycle can be halted and reversed. Any business can become an employer of choice by following these five strategies to transform company culture into one that (1) delivers value to employees, and (2) encourages their engagement.

 

Make Your Workplace a Positive Environment

If your business has been getting by with lackluster performance and frequent turnover, you’ll need a critical eye to evaluate the current culture. Try to hire for longevity and look for the best possible fit for each unique position. Employers of choice search for employees who can make a positive impact on not only their work but their team, too.

 

With capable and involved staff, from new-hires to top management, you can build a workplace recognized for its atmosphere of trust, personal growth, and positive performance. There’s no room for micromanagement in this kind of workplace environment. Entrust your employees with a mission, direction, and goals—then step aside. Allow them to make decisions and respect their choices. In a positive environment, differences of opinion become opportunities for learning and growth.

 

Provide Relevant Compensation & Benefits

Competitive compensation has always been a hook to catch the attention of potential employees. Even if your business cannot support top-tier pay and benefits, you can shape your compensation package to deliver the value your employees want. Offer the best salary you can afford and supplement it with bonuses and perks that reward company performance. Recognize that today’s employees place a high value on their time—and offer flexible scheduling and remote work options. Consider turning the standard break room into a comfortable lounge where workers can relax, play games or socialize. Go beyond the traditional benefits by adding college loan contributions, paid time off for family emergencies and parental leave to your benefits package.

 

Encourage Professional Growth

Engaged employees have a keen interest in professional growth and career development. Employers of choice encourage this interest by supporting their team with relevant training and additional growth opportunities, including:

 

  • Professional development seminars
  • On-the-job continuing education
  • Exposure to new tasks through job rotation
  • Tuition reimbursement for certifications & advanced degrees
  • Pathways for advancement

 

Establish Transparency

People like to know where they stand in a relationship, job, or career.
Professionals who feel uncertain about their place in the organization, workplace expectations, or their own performance may seek other opportunities with another company. Transparent communication and clearly defined expectations give your team the perspective they need to stop worrying and start investing in the job. Employers of choice also develop channels for mentoring, giving helpful feedback and praise, and rewarding performance and risk-taking. They provide opportunities for teams to voice their ideas and concerns. Feeling safe and appreciated, employees buy-in to the company culture and become engaged.

 

Create a Collaborative Culture

If your company is to become an employer of choice, you must develop a respectful and collaborative community. Engaged employees appreciate corporate responsibility, and they have expectations of your business that go beyond products, services, and profits. Workers want to feel their companies are good local and global citizens. Employers who embrace charitable outreach are rewarded with employees who are more confident, purposeful, and willing to work as a team. You can boost staff morale and develop a meaningful and relevant work community by sponsoring activities that include:

 

  • Food & clothing drives
  • National fundraisers
  • Community clean-up initiatives
  • Health & wellness fairs
  • Recycling events
  • Health awareness campaigns

 

Become an Employer of Choice With ELFI for Business

Today, a college degree is more accessible than ever—and more expensive. An employer contribution to student loan repayment is one of the best ways to attract loyal employees. ELFI has created a cutting-edge benefits program that is easy to access through your HR portal and includes multiple incentives for attracting and keeping top talent. Take the first step to becoming an employer of choice.

 

See Why Employees Leave

 

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

The Best Ways To Engage Millennials At Work

Just ask!

As of 2019, millennials are roughly between the ages of 23 and 37. Many millennial employees are nearing their late 30s and likely have good work experience and instincts. Even younger millennials are pretty business-savvy as they’re used to reading about their field and Googling questions to make sure they’re informed. With these traits in their favor, millennials can be a good second set of eyes to give you another point of view on a decision or project brief. Get their opinions or help with decision-making to broaden your perspective and to help raise buy-in.

 

Give regular feedback.

In the era of ghosting and impersonal communication, many professional millennials yearn for up-to-date information on where they stand. Whether this a one-on-one, review or just feedback in general, they want to know their status at work. The approval of supervisors can mean a lot to this demographic. Millennials tend to work hard to meet and even exceed their professional goals. Your job in this process is to let them know when they are on track, ahead, or behind. No hand-holding needed: just don’t let them be in the dark about progress and they will be happy for the engagement.

 

Stick to a predictable review process.

Along with being available for regular feedback and check-ins, millennial employees count on a predictable review process for a few reasons. Millennials want the opportunity to shine, and that’s not possible if they don’t have face time with leadership, especially supervisors who may not be involved in their regular projects. If their job doesn’t require even semi-frequent check-ins, regular feedback likely won’t be enough to let them know how they’re performing. Plus, following a set schedule and using a standardized system for assessment takes away any chance of ambiguity or uncertainty.

 

Connect with their values.

Millennials want to feel like they’re doing something to improve their community. This drive to “save the world” even in small ways is because they grew up learning to take care of the environment and people around us. Companies can drive engagement by giving millennials a way to get involved with company initiatives that fit their values. That could be coordinating off-site events and team-building for a purpose. Get millennials engaged in internal campaigns like adopting a comprehensive recycling strategy, or finding vendors who are local or minority-owned. Sustainable initiatives can be a big hit among this crowd while also saving money. Think about how you can connect things like lowering shipping costs with lighter packaging or using recycled materials.

 

Give them a challenging goal.

Most millennials want to feel valued and adept at their jobs. It’s important to be proud of what you do and feel like you’re making an important contribution. The best way to attain that fulfillment is to reach your goals. The nice thing about setting challenging goals to engage your millennial employees is that you also get to see them make amazing progress. You also get to watch them develop skills that are important to their role on your team. Instead of telling someone to wing it or figure it out. Management can engage employees by working together to set up the challenge. The employee will be tasked with the dirty work of getting down to business and making it happen.

 

Make them the lead on a project or initiative.

You might find that you get better engagement out of younger employees by putting them in charge of something. Many millennials want the chance to show what they’re made of. What better way to do that than to take responsibility for something? You’ll never know what your people are made of if they don’t occasionally get to prove their abilities. That doesn’t mean you have to take a big risk, but let them know what their responsibility is. Why could their performance mean a lot for their reputation or respect? You will likely be surprised.

 

Offer career and personal development opportunities.

With millennials poised to make up 75% of the workforce by 2020, helping prepare them to take over is critical to your company’s success. Good news, millennials want to do the kind of professional development that will make them ready! As employees start to think about a retirement plan, you don’t want to let all of that experience and prowess walk out the door. Consider offering development for millennial employees. This can help keep them engaged and strengthen the company’s transition from one generation of leaders to another. Don’t forget about personal development opportunities, too. Plenty of organizations can partner with you to offer workshops on life management or volunteer opportunities. People will find workshops and volunteer opportunities personally valuable. These opportunities will help them be better employees even if they’re not working directly on building a career skill.

 

Keep open communication.

Finally, the biggest thing you can do to keep millennials engaged is, communicate. This generation might be guilty of relying on emojis at times, but they hate guessing and value honesty. Find ways to facilitate conversations both big picture planning and everyday updates and time for open feedback.

 

5 Benefits Millennials Look For

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

 

Employer Participation in Student Loan Assistance Act H.R. 795

Nothing could be better than working for a top company that helps you pay off your student loans, right? Well, a bill was introduced by legislators on 2/1/2017 that is trying to make this a reality. This bill was introduced as the Employer Participation in Student Loan Assistance Act. In addition to the introduction of this Act, the Internal Revenue Service (IRS) also released a private letter ruling. What could these events mean for companies and employees who carry student loan debt?

 

Employer Participation in Student Loan Assistance Act

First, this bill would amend the tax code by giving tax breaks to employers that provide educational assistance to employees. Educational assistance can be in the form of contributions to student loans through either a payment to the employee or lender.

Specifically, this act would allow employers to offer a tax-free student loan benefit in addition to a salary to its employees.

 

IRS Private Letter Ruling

 

Recently, there was a private letter ruling released by the Internal Revenue Service (IRS). If you want to review the contents of the private letter ruling, it can be found here. The ruling allows employers to use 401(k) plans to help employees pay down their student loan debt. It is done by taking the employer 401(k) match to pay down student loans.

 

Any employee who is eligible for a 401(k) plan would be eligible for this plan. The ruling states that the plan is a voluntary program that employees must elect to enroll. Employees who choose to participate in this plan would be eligible for non-elective contributions made by the employer to their student loan debt. These contributions would be equal to what would have been contributed to a 401(k) plan had the employee opted out of the program.

 

What Does Student Loan Debt Assistance Mean for Employers?

When managing a business, it is imperative that you stay on top of recent news. Part of staying on top of things includes understanding what challenges your employees face. Both these aspects of operating a business and understanding the needs of your employees, however, can fall hand in hand. When it comes to student loan debt assistance, it can be a huge positive for any business. Not only does student loan debt assistance help employees achieve their financial goals, but it also brings many benefits to a firm.

 

Offering a student loan debt assistance program does not typically cost a company extra. The employer contributions to student loans are what a company would have typically made as a 401(k) contribution. Therefore the costs of providing 401(k) contributions and student loan debt assistance are equal. Another positive that comes from offering a program like this is that it helps with finding top talent, recruiting, and retaining all-stars. With older generations of employees retiring in record numbers and the workforce shifting to younger millennials, it’s important to take some time to examine the benefits of providing student loan debt assistance.

 

As many millennials have student loans and report that paying them down is a priority over saving for retirement, companies should begin thinking about reevaluating their benefits package to attract millennials. Finding ways to help this generation pay off student loans could be a big boost to a company’s recruiting strategy. Offering student loan payment assistance could put a company on the cutting edge as far as millennial professionals are concerned.

 

Click to Learn More About ELFI for Business

 

According to a benefits report by OneDigital, nearly 80 percent of employees surveyed by American Student Assistance felt that an employer-sponsored student loan repayment benefit would be a deciding factor in accepting a job. This could be a huge differentiator for an employer aiming to recruit the best employees.

 

The American Student Assistance survey also showed that 86 percent of employees would feel compelled to stay with an employer for at least five years in exchange for student loan repayment assistance. Considering how much companies spend on turnover (recruiting, training, and onboarding new employees), this could mean huge potential savings on talent management costs for employers.

 

What Does Student Loan Debt Assistance Mean for Employees?

Some companies already offer student loan assistance, but these funds are usually taxed. This type of assistance isn’t as attractive as pre-tax funds because taxes reduce the impact of payments on student loans. Tax-free repayment funds from an employer could be more effective in helping graduates pay down their student loans faster. Employees would avoid incurring taxes associated with this type of assistance.

 

Many Millennials also face the question of, “Should I save for retirement or pay down debt first?” Student loan debt assistance could be a solution that addresses both concerns. Young employees would have the ability to make substantial payments towards their student loan debt. With these large payments, they will be able to cut down their repayment time. That means young employees would have the ability to start saving for retirement earlier in their career instead of trying to pay down their debt.

 

Looking to the Future of Employment and Student Loan Debt

 

With the recent Employer Participation in Student Loan Assistance Act and IRS Private Letter Ruling, it seems student loan debt has become a problem for employees. Since employees are having difficulties with paying down student loan debt, it is time for employers to take action. Not only will employers benefit from offering student loan debt assistance programs, but it will most likely be at little or no cost to them.

 

If this act becomes a law, experts think that companies will immediately begin to rethink their benefits package and consider student loan debt assistance as a way to attract the best employees. Though it may not be easy for millennials to land a position with one of these companies, they will certainly have another factor to decide in student loan debt assistance when choosing their employer.

 

Interested in starting a conversation regarding your student loans? Give us a call: 1-844-601-ELFI.

 

5 Benefits Millennials Look For in Employers

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the web sites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

The Solution to Millennial Employment Turnover

The Millennial Generation or those born from 1981 – 1996i seem to be the biggest target for social commentary. Millennials have been blamed for the decrease in napkin sales, the increase in renting versus buying, and have numerous stereotypes like the generation without social skills. If it isn’t clear, Millennials have certainly become the generation every other group loves to hate.

 

If the lack of social skills weren’t enough, here is another reason people are finding it hard to approve of the millennial generation – the lack of loyalty to employers. Currently, 60% of millennials are open to a different job.i The loyalty that previous generations had to their employer is lost among the Millennial Generation. There doesn’t seem to be any lost and found box where companies can go to find that lost loyalty, either. Could it be the lack of raises or is it something missing from your human resource offerings?

 

The average college graduate leaves school with $37,172 in student loan debtii. That college debt is more than any previous generation. When your workers are carrying more debt, they are more conscious of what they are getting paid. Student loan debt can be like a fire for some borrowers, as they need to eliminate the debt as soon as possible before incurring additional damage.

 

Allow us to put this employee need in perspective for you. Three in five young workers say a higher priority for them is paying off their student loans, not retirementiii. What a compelling insight into what young workers are focused on. This provides a perfect illustration of why your traditional Human Resource benefits like a 401K may no longer be enough to keep a young workforce motivated.

 

Before we continue, let’s clear something up, the problem of student loan debt doesn’t only affect younger workers. Though younger Millennial workers are highly affected, one in five adults, ages 30 to 44, have student loan debt according to PEW researchiv. So what can you do as an employer to address the concern of student loan debt and keep your employee motivated?

 

We would recommend adding student loan education and assistance to your suite of HR benefits. It’s a no-brainer to add an HR benefit that doesn’t cost your company anything. Yes, you, as an employer would pay nothing to offer this to your employees. Education Loan Finance offers a program where a link can be placed directly into your HR portal. It’s almost effortless to partner with a company and offer this benefit!

 

Want to blow your employees out of the water? Consider offering to contribute to your employee’s loans. You’ll never have problems with employees leaving, at least while they have student loan debt anyways. There are multiple different methods available to offer student loan contribution to your employees. You could offer a type of sign on bonus payment to be applied directly to the principal of the loan. These types of bonuses are great for the holiday season, sign-on bonuses, or reward for a job well-done. A second popular method of contribution is a monthly payment. Below is a chart we’ve put together to illustrate how employer contributions can have a huge impact on student loan debt. Take a look for yourself and see how an employee with student loan debt could be easily motivated based on this simple and free HR benefit.

 

Total Employee
Loan Debt
Loan Lifetime Interest Rate Annual Employer Bonus Total Employee Savings
$37,000 10 years 6% $1,000 $10,269
$200,000 7 years 6% $1,000 $5,843
$200,000 10 years 6% $1,000 $11,102

 

If you aren’t sure if student loan repayment assistance is right for your company that’s okay, but keep that in mind any time you receive a two-week notice from an employee. There are multiple plans available to help your employees navigate their way through student loan debt repayment.

Common offerings an employee can gain by working with a company may include employer contributions, student loan refinancing, and educational tools. So how does an employer add this to their employee offerings? It’s simple, by partnering with student loan refinance companies like Education Loan Refinance; you have the opportunity to make student loan debt assistance benefits a reality for your employees. Now, there is no guarantee that offering benefits to employees will keep them from leaving. Aside from benefits, there are billions of reasons people leave jobs. For younger generations like the always loved Millennials taking on more and more debt each year, this is a MUST. To be considered groundbreaking and modern, your company will need to be offering student debt assistance.

 

Learn How ELFI for Business Can Help You 


i   http://www.elfi.com/elfiforbusiness/
ii  http://news.gallup.com/businessjournal/191459/millennials-job-hopping-generation.aspx
iii  https://www.creditdonkey.com/average-student-loan-payment.html
iv  https://d9jmqzwnxk1s1.cloudfront.net/wp-content/uploads/2018/08/14141823/asa_young_worker_and_student_debt_survey_report-1.pdf 
v http://www.pewresearch.org/fact-tank/2017/08/24/5-facts-about-student-loans/

The First Steps of Starting a Business

Most people go to college with the end goal of landing a job in their field. They may dream of working for a successful business, becoming a teacher in a large school system, or caring for patients in a well-known hospital. These are vastly different careers, but they have one thing in common – they all involve working for someone else. Often, the idea of starting a new business does not occur to college students and young professionals. The notion of being one’s own boss may sound a little far-fetched to students who, due to the recent recession, are aiming for more practical jobs. However, your younger years may be the prime time to start a business. In your early to mid-twenties, you likely have no mortgage, no children, and more free time to dedicate to your blooming business. If starting a business at your age is feasible, and you desire to pursue a great idea and be your own boss, what is stopping you? Follow the steps below to learn how to begin the process of starting your own business:

  1. Come Up with an Idea

The first step in setting up your own business is to determine how you will generate revenue. Is your business built on products or services? Is your idea unique or will you be entering a highly competitive market? If the idea falls into the latter category, what will be your competitive advantage? Having a solid idea is the first step to building a successful and profitable business.

  1. Develop a Business Plan

The next step is creating a business plan. A business plan is essentially a plan for your business, and it outlines your goals for the future of your business and how you plan to achieve those goals. It is comprised of many topics including your basic concept, funding, mission, values, target market, competitor analyses, strategy, and financial projections. A strong business plan is crucial for the next major step in the business development process — receiving funding.

  1. Prepare Yourself Financially

Different businesses have different financial needs, but even the simplest of businesses may be costly to establish. Your business plan will help you assess where you stand financially and figure out an estimate of how much money your business requires. There are two actions you can take to start your business on the right foot — saving money and earning money.

  • Saving money is an often-overlooked element of setting your business up for success. Many successful entrepreneurs started from scratch and had to make personal financial sacrifices to keep their business afloat. Creating a budget and cutting back on expenses is an effective way to set more money aside for your business. If you are in the process of repaying education loans, consider refinancing and consolidating in order to get a lower interest rate. For more money-saving tips, check out this post. There are so many creative ways to cut back on spending and allocate more money to your business.
  • Earning money for your business can be difficult and time-consuming, depending on the amount of money you need. If you do not have the required amount at first (and most people do not), there are several ways to earn it. You can work part-time, while developing your business, to yield some extra cash. You can ask for financial support from your friends and family or set up a page on a crowdfunding site such as Kickstarter. Another option is getting in touch with investors that may give you financial support in exchange for stock in the company. You can also take out a loan from a bank or government agencies such as The Small Business Administration, which lends money to help entrepreneurs grow their businesses.

Although these three steps are not the only elements in creating a business, they are the hardest and most important. Along with ideas, business plans, financial and legal factors, marketing, and more, starting a business requires risk-taking, passion, and hard work. It is not easy, but it is exciting, dynamic, and often worth the risk.

 

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