The real cost of losing a STAR performer
Feeling restless? I’m glad you’re owning up to it. So now what? Grab a wine, consider your next job and hit the EXIT button! This is a likely outcome for many driven star performers. Many businesses lose great leaders as it is not realised early enough that as leaders, innovators and entrepreneurs, they can get bored easily. Businesses need to retain their talent, watch the signs and create new opportunities for their stars.
Interstellar Leaders and Star performers
The aim of one of previous posts was to give you some insight into the skills and qualities of one of the best leaders and star performers in the world of fiction – Darth Vader. And there’s a lot we can learn from this with our earthly leaders. While it’s difficult to see Darth Vader as anything other than a fiend, he did have a good side. Read on to see why Vader was a leadership rock-star and what we can learn from him and remind ourselves about our own great leaders:
- Mentors. Vader had great training and qualifications relevant for his leadership role. To put it simply, he learnt from the best.
- Performance Management. “You may dispense with the pleasantries, commander.” I’m here to put you back on schedule.
- Vision. Join me, and together, we can rule the galaxy as father and son!
- Team Focus. Perhaps I can find new ways to motivate them and needed the support of a team.
- Rest and Recovery. No leader works 24/7 without a minute for themselves.
As you can see, Darth Vader is a perfect example of the successful leader with some distinctly ‘winning’ qualities. A great team manager, Vader knew how to establish mutual respect between those involved in the ‘organisation.’ He was a great team manager and a hard worker. His tactics might have been a little ‘dodgy’ but there is no doubt that his purpose was sound. For all these reasons we count the Dark Lord of the Sith high in our list of leaders we can pear from– as long as these do not include building Death Stars or blowing up planets. So reflect on your leaders today, the great skills and abilities they have and why it’s so important to keep them!
SIGNS your STAR PERFORMER is LEAVING
Neil Shipman in Recruit Zone refers to “5 Warning Signs Your Star Performer is About to Leave.” Turnover is expensive, time-consuming, and frustrating. What’s more, if you happen to lose one of your best people, then your cash flow can start to suffer, and workplace morale may go down the drain too! Various studies have shown that the cost of losing a single employee can be anywhere up to 2 times that person’s annual salary.
That is because you do not only lose the money your hire was making for you, you also must pay out for on-boarding, training, and lost productivity among the rest of the team. The good news? Managers who pay attention to their staff and watch for signs of discontent can potentially stop the problem occurring in the first place. So here are five signs to watch out for that indicates your star performer is losing faith in your brand:
- A Change in Performance
- An Irregular Work Schedule
- Their Attitude Starts to Change
- They Contribute Less
- They Seem Suddenly Negative
Finally, if your bright-eyed hires barely contribute during their development plan reviews, or seem as though they are always nervous about the state of the company, something is wrong. Even the most loyal staff member will abandon ship if they think that your business is sinking.
Negative attitudes throughout the organisation and an overall lack of transparency when it comes to news about your brand might mean that your top performers lose faith in your business. Fortunately, all you need to do to turn this problem around is to have a discussion with them about their job security and implement a new strategy for brand transparency.
The ACTUAL COST of losing your STAR performer
In Linkedin, Andria Taylor shows that “The cost of losing a star performer is worse than you thought.” When a high performer walks out the door, it’s a huge loss – for you, your team and the company. The losses are tangible and intangible. Not only do you lose their unique skills, knowledge and energy they brought to the work, you lose customer and vendor relationships. It impacts the morale of your team.
And it happens all too often in the wine and hospitality industry. That’s bad news. The worse news is that losing a stellar employee costs even more than you know. So, if your star had an annual salary of $65,000, your replacement cost will be about $97,500. For a more senior position at $120,000.00, you’re out $180,000. Yikes, how did that happen? Why is the replacement cost of a high performer so much? Here’s how it plays out for the $65,000 high performer:
- The person leaves. There’s a gap – work is unfinished, customers left hanging, sales not closed, and projects left in midstream. Depending on their position, figure $20-25,000 of lost revenue or work left undone over two to eight months while you look for a qualified replacement.
- Another of your staff – who has their own work to do- tries to step in and figure out the projects, manage the department or pick up the customer relationships. Their work limps along or stops until a replacement is found. That’s two jobs being done halfway. Another $15-20,000 of lost work hours, quality delivery on projects and potential sales.
- Your HR department receives notice to start looking for a replacement. Figure $3-5,000 spent of human resources time spent reviewing the job, placing the ad, scanning incoming applications, doing phone screening, setting up interviews and second interviews, making an offer, negotiation and on boarding your new hire, etc.
- Time spent by more senior personnel interviewing four to five candidates once, maybe twice, along with lost opportunity cost. $5-10,000 depending on the seniority of the position.
- A new person is hired and arrives in two months at the earliest (four to twelve months for a more senior position). Figure the cost of work not done or half done during the interim – New hire many or may not be making more than the person they replaced.
- It could take a year for your replacement to be as skilful on the job as the person they replaced. Lost opportunity costs $30-40,000.
The total – easily 150% of their annual salary.
That’s the tangible cost. There are also the intangibles. When a high performer leaves, there’s a negative impact on the rest of the team or department. People wonder why he or she left, perhaps with a bit jealousy of their ‘new and improved’ position. As they say, the grass is always greener… Lowered morale sets in, perhaps a bit of unrest, as your current staff start wondering whether it’s time for them to start looking as well. The good news is there are many things you can do to retain your top talent, rather than seeing them leave for your competition. Granted, there will always be the occasional person who, when they depart, leaves to the benefit of everyone. But paying attention to the satisfaction and engagement of your solid and high performers will help your team and organization perform better – and save thousands of dollars!
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