Recorded Webinar

Transcript

[00:00:00] Azure Rooths: Welcome. My name is Azure Rooths and it is such a wonderful opportunity to be here with you today. Welcome to A Deep Dive into the Math, How to Justify Investments in Employee Development When Turnover Costs are Already High. Today's presenters will be Ben Brooks and Admira Adovich, and we are excited that you are here.

[00:00:22] Azure Rooths: As we move forward, I want to take a moment to do some housekeeping and introduce you to our amazing crew. Helen will serve as our producer. Helen, I'll turn it over to you.

[00:00:33] Helen Fong: Sounds good. Hi, everyone. My name is Helen. I'm your producer for today's session, which means that I'm primarily behind the scenes.

[00:00:39] Helen Fong: Feel free to send your questions, your comments through the everyone chat feature.

[00:00:44] Helen Fong: If you hear something that you really enjoy or agree with and want to support, go ahead and plus one or add someone based on their comment.

[00:00:54] Azure Rooths: Thanks so much, Helen. Let's jump right into it and meet our amazing [00:01:00] presenters today. It is my pleasure to introduce you to PILOT's founder and CEO, Ben Brooks. He's one of HR Executive's top 100 HR Tech influencers, and the author of HR Executives, Coaches Corner, where he shares insight and advice on dynamic business landscapes and how HR professionals can maximize their impact on their businesses as a pillar in the HR industry.

[00:01:28] Azure Rooths: Ben Brooks is the founder, CEO, and sole investor of PILOT, an award winning virtual employee development and group coaching program. Throughout his career as an HR executive himself and as a private CEO and executive coach, Ben has been a driving force to help other HR professionals avoid needless turnover.

[00:01:52] Azure Rooths: He's also an active advocate for diversity, equity, and inclusion, having served on the board of directors for Outserve [00:02:00] SLDN. which helped repeal Don't Ask, Don't Tell and co founded an LGBT employment resource group at his previous management firm. If you don't follow Ben Brooks on LinkedIn or Twitter, let me tell you, you're missing an opportunity to get to know one of the most dynamic and knowledgeable HR influencers around.

[00:02:25] Azure Rooths: And today he's here to walk us through a deep dive into the math to show us how employee development improves employee retention. Please welcome with me, Ben.

[00:02:39] Ben Brooks: Thanks Azure. Excited to be here and really excited to talk about this topic. I know HR people are starved for data and for math and they got to go to finance and make the arguments and the ask, et cetera.

[00:02:50] Ben Brooks: So really excited to have this conversation with our fabulous CFO as well.

[00:02:56] Azure Rooths: Thanks Ben. And let me take this opportunity to introduce you [00:03:00] to our co facilitator. Let's meet Admira. And you have to know that she knows. Finances. Mira is an award-winning financial consultant with over 10 years of experience across financial analysis and change management within global institutions.

[00:03:18] Azure Rooths: She's the founder of CARE, CFO, and the Go-to export for small businesses and strategic financial management, qualitative analysis and financial forecasting. With a business economics degree from Oakland University and a master's in accounting from the city of from City University of New York, and Mira holds award winning from world leading financial institutions, such as Bank of America, and the Department of Treasury.

[00:03:48] Azure Rooths: In addition, Admira is trustee with the advisory board of CFO Leadership Council to advance the council's diversity, equity, and inclusion [00:04:00] program. She is a rare find in the financial arena. Admira is both funny and warm hearted. She will put you at ease with her stories, her love of food, and family in no time.

[00:04:14] Azure Rooths: Please welcome with me, Admira.

[00:04:18] Admira Adovic: Thank you. Thank you so much. I'm so happy to be here. I'm so excited to talk about the same topic. The opposite of what BAN feels like where HR has a hard time talking to CFOs. CFOs have the opposite. We're like, we want it to reduce turnover. HR help us how we do this.

[00:04:35] Admira Adovic: So I'm so excited we're going to have this conversation and hopefully help more HR and CFOs close this gap.

[00:04:44] Azure Rooths: ThanksAdmirara. Before we get started, what is PILOT? Let's take a little take this opportunity to share a little bit about who we are and what we do. PILOT was founded to help everyone feel powerful at work.

[00:04:59] Azure Rooths: [00:05:00] We show participants how to use self reflection, solicit and accept feedback, advocate for themselves, and take effective action in their organization. This is done through four key methods of learning. Technology. Technology enabled group coaching where participants are broken up into groups or cohorts at the beginning of their pilot development journey.

[00:05:23] Azure Rooths: Next, individuals use individual reflection activities that can be done on their own time and on any device. We utilize scaled mentoring, which give participants access to higher level executives to learn the rules of work. And then finally, through one on one future focused management feedback sessions, where both management and employees focus on development objectives and aspirations, separate from their performance, conversations with their employees.

[00:05:58] Azure Rooths: Let's take an opportunity [00:06:00] to share with you some of the amazing customers that we have utilized from mid size to enterprise organizations across industry. That's the beauty of the PILOT program. It teaches core fundamentals for success, career, ownership, regardless of where you work. Also at the bottom, you'll see the number of awards that we have received from Brandon Hall, HR execs.

[00:06:27] Azure Rooths: Ernst Young, and recently a Top Supplier Award for our customer Diageo for Diversity in Excellence. And with that, we are ready to jump into our first session. So here we are at the top of HR professionals in 2023 is employee retention and reducing turnover. This has to be an organizational wide initiative and one metric all departments can get behind in their [00:07:00] financial impact.

[00:07:01] Azure Rooths: So Ben and Admira, how do you link the rate of turnover to its financial impact? More specifically, Ben, let's start with you.

[00:07:14] Ben Brooks: Okay, well, put a plus one in the chat if you think Azure warmed this thing up. It's pretty lit. I'm excited about this. This is our stuff. But that's a lot, that's a great job.

[00:07:23] Ben Brooks: So Azure, thank you for just getting us excited because, oh, turnover and math and HR and all this, and it could be like boring and drudgery, but I'm pretty excited just by how you tease this out. So look, when you think about an employee quitting, right? And especially a really good employee, it can be devastating, right?

[00:07:41] Ben Brooks: Let's go back one slide real quick before we get to this one. You know, and you think, oh, gosh, here's my top performer. They resigned. Oh, my gosh. You think of the emotional impact, the stress, the anxiety. How am I going to recruit? Who's going to cover the work? But there's the financial impact too. if you have an employee that was a [00:08:00] revenue generating, billable hour, quota carrying, client book owning, right?

[00:08:06] Ben Brooks: That has an impact. You have to go hire, a recruiting firm, maybe third party, or you got to do background checks, or you got to bring in consulting or temp labor to cover them. You got to train them. You may have to send them new equipment. You may have to have them travel to a home. There's a lot of money.

[00:08:22] Ben Brooks: So there's as much as there's feelings. The financials are an important part, and this is the feelings the manager often feels, the supervisor of that person or the department head. But the financials, the organization experiences, and so that's where I think doing something about turnover, when we bring it into, what takes the organization's resources or even wastes them, this is where this is.

[00:08:45] Ben Brooks: Admira, how do you think about turnover and money coming together?

[00:08:50] Admira Adovic: Yeah, so, it's in finance. A lot of times we have a hard time linking the people to the numbers [00:09:00] piece. But it's important to link the two especially in the professional services industry. While the employee quitting is like, Oh that's an extra money that we would not pay the employee, but it's looked at the wrong way, because you're right. It's what is going to impact is the billable time, if that employee is billable, because now all of a sudden you're going to have to hire a contractor, which is always more. Not to mention the contractor doesn't know the culture of the company and is not able to provide the same service that your employee would have because has been trained within the company.

[00:09:32] Admira Adovic: So that's one, but even if it's not a billable person, if it's an operations person, now all of a sudden you're behind and I'm hitting the strategic initiatives you have wanted for the company, because this person just left. And now you're all of a sudden not going to hit the objectives. That you have planned for the year for the company.

[00:09:51] Admira Adovic: So that's on that one. And then on the hiring piece, a lot of times people don't think about this, but it's like, oh hi, we're just gonna pay a recruiting fee. It's gonna be about [00:10:00] 20%. No, there's more to that. What about all the executive time is gonna spend on hiring? All of a sudden now they have to set time to recruit and interview.

[00:10:10] Admira Adovic: When they should have spent time on strategy, for example. So there goes more to it. And I know we're going to go to actual numbers in a minute, but when we're thinking about this, if we're looking at the bottom line, there's everything impacts finance, everything, like even to the slightest detail that people don't really think about and turnovers are an exception.

[00:10:30] Admira Adovic: So there's so many things that actually do hit the bottom line and not to mention the culture piece. which is yes, emotional, but also impacts productivity or other employees that were attached to this particular person that have just now left et cetera. So I agree with you a hundred percent. It is it is costly.

[00:10:51] Admira Adovic: And I know we're going to go through that detailed numbers, but yes,

[00:10:54] Ben Brooks: and if we go to the next slide real quick, I'll walk through you know that look, the turnover rate is going to vary by [00:11:00] industry or geography right so we've got people in Malta and Berlin and people in Atlanta and Newport News. Different geographies are going to have different turnover rates different industries right you look at you know, Walmart in store employees, they may have turnover rates, approaching 50 to 100%, believe it or not. You know, you have other industries that have single digit, right? But nonetheless, you're going to have people that turn, right? And sometimes, layoffs are one thing, right? But voluntary, right?

[00:11:28] Ben Brooks: Where the employee is saying, I'm out of here. The great resignation is really what we're talking about. And in particular, for those folks that you regret when they leave you know, and the turnover since the pandemic, Gartner's got some research that turnover is up nearly 20%. Most organizations have felt that if you've seen turnover, I mean, , by the way, at least I'm in New York City, it was earlier this week, Monday was three years since we had that stay at home order put in place.

[00:11:53] Ben Brooks: That's crazy. The three year anniversary put a plus one, if you've seen. Turnover increase in the last [00:12:00] three years in your organization, or if you've worked at multiple organizations. This again helps us get some data from you all. You know, and again, we'll talk more about what does it cost to replace someone.

[00:12:11] Ben Brooks: SHRM, we got built in, there's a bunch of different things, but it's usually a multiple of an employee's annual comp, right? So you might say, oh, our recruiting fee is, $20,000 or $5,000 or something. But, you know, brand new employee on day one is not fully productive. You got to train them, you got background check, you got new equipment, you got all these different things.

[00:12:30] Ben Brooks: And then again, Gallup is estimating that the economy in the, in, in the U. S. at least I know it's a global conversation today, but even in the U. S. We're essentially costing, businesses a trillion, that's not a, that's not a typo, trillion dollars because of this switching. Right? And if you were to think about this from the perspective, if you were like Netflix as an example, probably most of us on this call are Netflix subscribers, or we use our friend's Netflix password or something.

[00:12:58] Ben Brooks: You know, [00:13:00] Netflix doesn't want to go to all the effort to market and get you to sign up and get your credit card or debit card linked and then have you leave. Because it's a lot of effort to get a new customer, right? So SaaS businesses, subscription businesses, are very focused on reducing customer churn, because it's critical to their business, because the revenue goes away.

[00:13:23] Ben Brooks: But we don't think of it quite this way with employees, but employees increasingly in our service based economy are a part of what drives all of that revenue. So if they're churning, they're It's like our inventory is churning. Our ability to provide these services is churning. So, Admira, when you see these numbers, what comes to mind for you?

[00:13:42] Admira Adovic: It's mind blowing. I mean, when I saw Gallup it is the second time I'm seeing it in just two weeks. And I was like, it has to be a typo. Like, no way. And it's not. It's actually a research done. It was not made up. And it's astonishing. It's one trillion [00:14:00] dollars that purely hits the bottom line.

[00:14:03] Azure Rooths: Admira, you said it, that trillion dollars, I wonder if the 56 people on this call have an idea of how much it's really impacting their organization. So to get a gauge, let's launch a poll right now. Helen, can you launch our poll?

[00:14:20] Azure Rooths: How confident are you in your ability to convey the financial impact of high turnover rate to your executive right now.

[00:14:31] Azure Rooths: Let's take a look. We're at 71%. Let's give it about 10 more seconds. Are you very confident that you're able to move this conversation forward? Are you somewhat confident or not confident at all? So, here's the data. Our participants feel somewhat confident. What can you say to help move that forward a little more?

[00:14:58] Ben Brooks: What I'll say is you're in good company, [00:15:00] right? So if you came here and you're like, I want to get better at this, you're not alone, you know, last week I was in San Francisco, SHRM had a technology conference I spoke at, and we talked a lot about bringing the financial argument and the data driven argument, not just here's what we could do.

[00:15:15] Ben Brooks: And, in the past, when HR was more focused on risk reduction, like employee relations and not getting sued and those sort of things or cost reduction, right? Those sort of things. It was easier to make some of these arguments because we had the law as our bully pulpit, or we had, like, this is what's going to do our cost.

[00:15:32] Ben Brooks: But when we're doing these more strategic and proactive things around employee experience, DEI, and talent management, employee development. It requires a different skill set. So part of being a relevant HR professional is learning how to make more of these financial and performance and as Mira said, strategic based you know, arguments.

[00:15:53] Ben Brooks: And so this will be a part of what we're going to equip you with. We've got some tools to help you after this as well. Our team will walk you through those and we're going [00:16:00] to be a support because we're committed that when we say everyone feels powerful at work is our mission statement that includes people like you all in HR who are helping your employees to develop and grow.

[00:16:08] Ben Brooks: We're going to help with that as well.

[00:16:10] Admira Adovic: Let me just add like us in finance, we are looking to HR professionals to help us figure this out. Yes, we are very much so numbers driven, but I go to HR all the time. I'm like. What do we need to do? Tell me what do we need to do? And yes, we do need to see the numbers.

[00:16:28] Admira Adovic: That's very clear, which again, we'll walk you through with some examples here. But don't shy away from being like CFO, we need to do something about this. This is what our options are, because that's really what we're looking for is like come to us with a solution. So we can to help the company and employees and everything else in the company.

[00:16:50] Azure Rooths: Love it. Thank you, Admira. And we talked about the willingness to offer solutions, so I want to put you to the test. [00:17:00] Here's a scenario. So either Ben or Admira, can you walk us through an example of how an organization can link turnover rates to their financial impact? So here's the scenario. ABC company wants to reduce turnover rate and is considering employee development as a solution.

[00:17:18] Azure Rooths: Can you explain how you would help those on this team do that? Either Ben or Amir. Amir, let's start with you, Ben. What do you think?

[00:17:28] Ben Brooks: Yeah if you look at the research around why is turnover happening, right? Turnover in some ways is a mind game, right? And so, people will, what I call kind of career bankruptcy, right?

[00:17:41] Ben Brooks: They blow up a job and they leave, right? In the height of the great resignation, over a third of salaried employees were leaving their jobs without another job. They were just over it, right? Burnout. And one of the main reasons is people feel they're at a dead end with their employer, right?

[00:17:57] Ben Brooks: That's, McKinsey, Pew Research Center, that the [00:18:00] number one or number two driver of what was causing employees to voluntarily quit was they were like, I'm, I've capped out here. There's not opportunities to grow or to learn or to get better or to advance or to make more money or to get new opportunities.

[00:18:16] Ben Brooks: I'm bored. And so. This is where getting in front of it with developing folks is key. And this is where if you've ever done an employee engagement survey, I've seen, like God's honest truth, probably a thousand organizations worth of employee engagement survey findings, and almost every single time.

[00:18:35] Ben Brooks: Feedback, learning and development opportunities, the ability to grow is a key driver of why engagement is either high if they have those things or low if they lack those things. So the reason we're saying employee development to link to turnover is hey, if we've if our turnover rates have gone up like they've gone up for the country. [00:19:00] And we want to reduce those because we know it's expensive. It sometimes takes money to save money. Right. It's an intervention. Right. Little like going to your doctor for an annual physical. Yes. It takes some time, and there's a copay, but versus, winding up in the emergency room because you don't have something costs a lot more.

[00:19:19] Ben Brooks: You've heard the old adage, an ounce of prevention is better than a pound of cure, or whatever the metric equivalent is of that. So that's where I think, as we talk about this scenario, and Amir, I'd like to hand this to you, is to think about, we want to do something, right, to help prevent this costing trillion dollars worth of essentially waste, but it's going to take an investment to do it, which is hard because it's like, well, wait, we're already spending all this money on turnover.

[00:19:44] Ben Brooks: And now you want to spend more money, but really it's to say, Hey, I actually want to spend less money. I'm going to reduce our waste by making a small investment here to save a lot of money over here. And Mira, how do you see it?

[00:19:56] Admira Adovic: Yeah, funny enough, I actually wrote a quote I was going to say, and we did not [00:20:00] revise this, you guys, so very, it goes to say how alike we think.

[00:20:06] Admira Adovic: I am a finance professional, Ben is an HR professional. And what I wrote down is it's easier to save money than it is to make money. And this is a quote that Warren Buffett came up with. And just like with everything, even with saving money, it doesn't magically show up in your bank account. You actually have to put the money in and it doesn't magically stay there unless you make sure that you continue to put money in and continue not to touch it, take the money out.

[00:20:33] Admira Adovic: There's no difference in employee development. And I can concur on that in my, not last employment, but deployment before that. I left without a job lined up because I was fed up. I tried so hard to go up the next level. Management wasn't hearing me. I kept doing more. They still didn't see me.

[00:20:53] Admira Adovic: And I was like, how can you actually pay attention to me? I want to develop myself and you're not, you're just putting blocks in front of me. [00:21:00] However what I want to say about employees, and a lot of times I see it, especially in the finance world, it's like, Oh, we just have to pay people more.

[00:21:08] Admira Adovic: It's not always about being paid more. It's about, are you providing more than just the salary piece? Because yes, of course, anybody can go get a higher salary, but that usually is not the satisfaction that employees look for. They're looking for, is there a challenging opportunity for me? Is there is there care for me?

[00:21:27] Admira Adovic: Is somebody actually paying attention to me, giving me a career path and also advocating for that yourself is like knowing what you're looking for and how to communicate that. So there's more to it than just you know, like the salary piece, but just like Ben said in turnover, especially even before turnover, but in turnover, especially it's not spending more money.

[00:21:48] Admira Adovic: It's actually preventing from it increasing because once the turnover starts. it's only going to increase because it continues. It's like, Oh, so that person left. Well, I'm going to leave too. And [00:22:00] the third one, well, what are you doing to actually stop it? And do something about it. And it takes money to I mean, it's easier to save money than to to make money.

[00:22:09] Admira Adovic: And so that's true also with employees.

[00:22:12] Ben Brooks: I think, you think of, look at the bank run that we saw on Friday and, over the weekend, humans are herd like creatures, herd mentality, right? Where we do a particular thing together. And turnover is like that. When one person goes for the exit, they're like, should I be running for the exit too?

[00:22:29] Ben Brooks: And then another person goes, well, then I feel stupid sitting here. So this is a very sort of dangerous thing because it can really snowball. And if we look at some of these, we're going to talk more about numbers here. So we promised math. So we're going to get into the math. Right? And by the way, Zoe mentions plus one to you, Admira, right?

[00:22:46] Ben Brooks: That she left her job and finance career through three years ago for similar reasons, right? And people, employees will get fed up enough. Like it's not about necessarily more money somewhere else. It's about less, frustration, right? So if you've got a thousand employees at a company, right? And [00:23:00] your average salary, you probably have a sense of your average salary.

[00:23:03] Ben Brooks: You can break this down based on levels or line of business or geography, right? But you also want to factor in, if you pay a person $77,000, in this case, US dollars a year, You're not actually, that's not actually true cost on your books, right? Because you got to pay payroll taxes, and you got to pay the MTA tax in New York, you got to pay, Social Security and Medicare, you got to pay your, if you offer medical benefits or other sort of retirement.

[00:23:28] Ben Brooks: So on average, we've got some source citations here but, about 31 percent is a standard benefits rate or the average. So sometimes it's a little bit lower, sometimes it's higher, but even if you want to say conservative, it's maybe 25, you know, 30. So your true cost of that person is 101, 000.

[00:23:44] Ben Brooks: Like they, they're getting in their W 2, it's going to say 77K, right? But when, but the company's full cost, when they say how much money went out of the bank. over a given year for that person just on their comp. That's not like their tools or their resources, their travel or their anything else.[00:24:00]

[00:24:00] Ben Brooks: That's $101,000 a year. Is that how you see it as well in terms of real cost?

[00:24:04] Admira Adovic: And I want to just emphasize this is U. S. based and I know we have people in Europe in here. In Europe, you will see the one on one because usually in Europe, they will include everything as like, they see things as net, not as gross.

[00:24:18] Admira Adovic: In the United States, We have the salary on top of that. We have to add all of these other benefits, but that's correct. Like a lot of times it's, I will say nine out of 10 times I will talk to an entrepreneur and I'll be like, Oh, that person costs a $77,000 salary. I'm like, no, it doesn't. What about the benefits and taxes and everything else?

[00:24:38] Admira Adovic: And all of a sudden, like, Wait, it's more? Yes, it is. So it's right. Like it's not just 77, it's 77 plus all the other taxes and benefits that the company has to pay on behalf of the employee in order to keep them at or have them at an employee to begin with. And some of them are government mandated, and some of them are voluntary, [00:25:00] but an average is 31%.

[00:25:02] Ben Brooks: And the reason we're bringing up that full cost is the cost of replacing employed the first line here, we saw you saw on the prior slide is somewhere between 50 and 200 percent of the total fully loaded compensation. So that 101 there's a reason this is all building, right? This is traceable here.

[00:25:21] Ben Brooks: So in this case between 50 and 200 percent is what it takes, right? So in some organizations, if you can find people really quickly, you train them really quickly, it like there's not a lot of, it doesn't take a lot of time, doesn't take a lot of effort, they're ready to go, right? Your percentage is going to be lower.

[00:25:42] Ben Brooks: If you're in an industry that's very specialized, long lead time to recruit, people might have garden lead between things. Maybe you have to, you have to buy them out of their equity at their last thing or prorate a bonus or do a signing, like those things. That's where the cost, the percentage goes up.

[00:25:58] Ben Brooks: So we're going to be [00:26:00] conservative at PILOT with these numbers as we show you this. Now you can adjust these. You're going to get the calculator and the spreadsheet to adjust these and you say, Oh, it's not 31 percent and here it's 25 You're going to be able to adjust these, but we're putting in conservative, fair, benchmark based estimates here.

[00:26:16] Ben Brooks: So 75 percent is what we're saying. So that 101, 000 person is going to cost about 75, 000 to replace, which might seem crazy, but if you start to read the white papers about all what's in there and what that takes that's actually not. And then you look at your turnover rate for your organization.

[00:26:33] Ben Brooks: So remember when I said, based on geography or industry, it's going to change, Walmart has a much higher turnover rate than Deloitte, right? Different industries. 15%, right? And then, you know, the, and so that, heard that company we talked about in the last image had a thousand employees, right? So what's 15 percent of a thousand is 150.

[00:26:54] Ben Brooks: Right? The average cost per employee is $101,000, [00:27:00] 75 percent of $101,000, about $75,000, times 150 people ends up at $11,000,000, 11.3 million. If you have 150 people quit at a 1,000 person company, with a 75 percent replacement cost. $101,000 average annual fully loaded compensation.

[00:27:23] Azure Rooths: Hey Ben, we have a really good question that just came in from Eddie.

[00:27:26] Azure Rooths: This cost seems really high. Is this for lower level jobs?

[00:27:32] Ben Brooks: That's a great question, Eddie, and hi. Great to see you, Eddie. It depends on the role for sure. A more senior executive job would typically be in the, the three digit percentage, right? You think about, what does it cost to replace a CFO at a publicly traded company? Retained search, interim coverage from a staffing firm, all sorts of different things like emergency board meetings flying in to do this stuff and putting people on a jet and all that, that becomes like a [00:28:00] lot more and it may take six or nine months to do that. So for a lower level to Edie's point could be a lower percentage.

[00:28:06] Ben Brooks: But what we typically focus on from just a pure recruiting, you might say, well, we have in house recruiters, we're not going to pay a 20 or 25 percent contingent. search fee based upon annual comp. Well, sure, but that's just the recruiting fee. But the organization's cost is what's the cost of not having someone in the role for however long that takes.

[00:28:28] Ben Brooks: What's the cost of training someone and, getting them to a meets expectations. The average is called time to competency on average for salaried professionals, more or less than about six months. So essentially the organization is paying a full salary, but they're not getting a full performance for the person, like a break even.

[00:28:46] Ben Brooks: So if you hire salespeople, as an example, you have a ramp period. You don't expect a salesperson to start day one in most industries and be at full quota attainment. They got to learn the product, they got to build a book of business, they got to have certain, pipeline that's [00:29:00] built, etc. Other roles are the same way.

[00:29:01] Ben Brooks: You're in finance, product operations, marketing, other things. It takes time to rise to that. But, McKinsey, PWC, Deloitte, all, Gardner, all these organizations have studied, and this is, and SHRM has studied these things, and it's typically this range, somewhere between 50 to 200%.

[00:29:18] Ben Brooks: Again, we're being conservative, saying it's about 75%, but that's not just the recruiting costs, it's the full impact to the organization to not have that role, Live with the knowledge, the full performance, and then also you have to bring in temps or consultants to fill in on work, you burn out other people have to pick up their workload, you have to push projects off, you have to delay things, etc.

[00:29:40] Ben Brooks: So, Admira, how do you think about that percentage? And Eddie, let us know in the comments if that helps answer that. Yeah.

[00:29:46] Admira Adovic: So yeah, That's a great question. And I want to reiterate in the previous slide, we did put the research where this came from. So we didn't really make up this number. It is, it came from research.

[00:29:58] Admira Adovic: It's between 50 [00:30:00] and 200%. and we're being conservative and picking 75. So I hear you. It seems high because it is, but it is a real number. And again, I know that the research is posted on the slides and I, I don't know if they're going to share it with on the on the email, but you can also keep look into that research as well, but it is correct.

[00:30:24] Admira Adovic: And everything that Ben said, It's when you include all of those little calls that people really don't think about it's, and that's where that 75 to 200%, I'm sorry, 50 to 200 percent comes from is that the research is looking at all these little details that normally we wouldn't look at. We wouldn't look at the executive time is going to spend or the board time that they're going to spend on interviewing this person and maybe not one interview, but three, four or five, depending how high the level is.

[00:30:51] Admira Adovic: When you include all of those costs, it's insanely high. That's how the one trillion dollars came about, is when you add those little things. It [00:31:00] adds up.

[00:31:00] Ben Brooks: And Zoe is making a comment. So by the way, if you all have, this is a community conversation today. So please like Zoe is modeling, Edie's modeling something amazing here.

[00:31:09] Ben Brooks: Zoe's modeling something amazing. If you've got your own perspectives, if you've calculated this in your firm or you think about it a particular way, maybe you disagree with us. That's okay too. This is a diversity of thought for our conversation, but Zoe's saying as a previous leader in finance, it totally is errors and omissions, right?

[00:31:25] Ben Brooks: Mistakes, if you will, From people making mistakes, delayed response times, et cetera, cost the organization as well, right? So sometimes you'll have turnover in an account with a key customer because the new person doesn't know them or something was messed up, et cetera, right? So now let's just say, Eddie, though, you say BS, like 75 percent is way too high.

[00:31:46] Ben Brooks: It should be 25%. Okay, well, it's still almost 4 million, right? instead of 75%, right? If you divided that by three, like still almost, which is still a lot of money, right? So this is where your organization, [00:32:00] there's benchmarking tools, other things, your organization, your clients can start to look at, and what is realistic?

[00:32:05] Ben Brooks: Finance professionals have all sorts of benchmarks. This isn't one study. There's a million different consulting firms that have done this analysis, and it's a range, but it's typically way more than we think, which is why Customer churn, we think of, we're like, Oh my God, we're losing, if Verizon is signing of all these new customers, but they're going out the back door on the other side, it's a crisis, right?

[00:32:27] Ben Brooks: The top levels of the company are involved. On the employee side, we start to look at the economics, it seems a little less traceable. You start to look at it, you're like, this is actually a crisis we must address.

[00:32:35] Azure Rooths: Yeah, so on that note, Ben, and thank you so much for chiming in, Ben Edmere, and thank you so much for your question.

[00:32:42] Azure Rooths: Edie, I want to throw this out now. Let's launch another poll to see what the team of people are here feel. Is it worth investing to save? So if you could invest money to save employees in turnover calls, would you do it? Helen is launching a poll. Is it [00:33:00] important for you to do it immediately? It depends on the initiative.

[00:33:03] Azure Rooths: Are you saying to yourself, sounds too good to be true or are you still on the fence? I don't know. So the poll has been launched. Let's take a look. We are 40 percent of the way there. Let's see how fast we can jump in. I'm going to give

[00:33:24] Azure Rooths: it about 15 more seconds. If you could invest money to save. employee and turnover calls. Would you do it?

[00:33:38] Azure Rooths: All right. And on that, I would say, let's launch and share. All right. So 50 percent of the people say immediately they see the investment, they see the value, but we still have some people on the fence. So let's move forward and ask another [00:34:00] question and see if we can put some more numbers behind the truth of this challenge.

[00:34:06] Azure Rooths: So Bennett Muir, we know the lack of employee development is one of the top reasons that people leave their jobs, right? So this is the question. How can HR professionals justify investment in employee development when turnover costs are so high? are already really high.

[00:34:24] Ben Brooks: I want to mention right before we jump into that, Darren is also modeling great thing.

[00:34:28] Ben Brooks: Darren says, in one organization, we also calculated other overhead costs for each employee, such as utilities, paper, seemingly insignificant costs associated with each employee. It was used to establish a global business expense per employee, which was used during our annual manpower planning process, right?

[00:34:44] Ben Brooks: So again, if you've ever been in management consulting or investment banking or other, you know, you know, big four kind of accounting things, you start to learn. That, it just, that what's on the offer letter of that salary ends up being a whole lot more when there's all sorts of other things and people [00:35:00] have, back in the day, a Blackberry and today it's an iPhone or this and that, and then we send them to the offsite and there's travel costs for that and then what's the cost of them having a cubicle or an office and, the work from home stipend and all those things that start to bloat in terms of an employee.

[00:35:13] Ben Brooks: And if you get a new one, you have to often, you don't, you have to restart a lot of those costs, right? Okay. Even at PILOT, someone leaves at our company, we're remote first, people have to FedEx their computer back to us, we have to swipe the computer, see if it's maintainable, if not, we have to go buy a new computer, mail those things out, we have to set up a new home office thing there's things like monitors it's not worth sending a monitor back in the mail, but we send everyone multiple monitors someone quits, we just have them keep the monitor, but then we go buy new ones from Dell, right?

[00:35:37] Ben Brooks: These things add up, right? So to your question, Azure, about how do you justify the investment. The kind of old way of thinking, old school I should say I don't mean in a sort of an age way, but it's an old paradigm, is like, oh, like we're under financial pressure there's strain, right, there's a recession fears and other things, industries are thrown out, let's just cut, let's make [00:36:00] cuts.

[00:36:00] Ben Brooks: But you can cut fat and you can cut muscle. So learning and development, talent management, leadership development is often a place that traditionally finance has taken a hatchet or an axe and said let's cut this. Now there's not a lot of dollars there in general typically right as a percentage of a company's cost base, right, but there's a desire to get rid of those costs to save a little bit of money. Which can then just boost your turnover cost because more people feel like they're at a dead end. They declare bankruptcy in their job and they leave. So again, this is the preventative thing. And, PILOT, for instance, if you were to use PILOT on average for about $1,500 per employee, as an example, many professional development stipends, let's go back a slide, many professional development stipends, if the companies are, 1,500 to 2,000, that's distinct from maybe a tuition reimbursement for a graduate degree, which You know, it was a higher dollar amount, but you also have very low uptake on programs like that, usually one or 2 percent at [00:37:00] most.

[00:37:01] Ben Brooks: We're talking about potentially as a percentage that 101,000 that we're paying for a person, right? You know, one or 2 percent of their comp we'd put into learning and development to address, right? So imagine you're in a marriage, right? And your spouse is frustrated about a thing, but it's like a thing that's like really easy thing to solve, right?

[00:37:23] Ben Brooks: I don't know, the lawn doesn't get mowed weekly and you're like, okay, I'll mow it every week or we'll hire someone to mow it every week. Something you're like, of all the things that are marriage, like this is like in some ways employee development is one of these things where it's like, it's really important to the other person, to the employee.

[00:37:37] Ben Brooks: But it's actually not that big of a deal to solve, right? So if you're in a, if you're in a business selling a product and you had something that was super valuable to a customer, but it was really low cost or easy to provide, it would be called a high margin business. It's like, Oh, I do this thing that you really care about, but it's really easy or affordable for me.

[00:37:55] Ben Brooks: That's where this can be. And again, if you can, if you look at [00:38:00] the cost of someone turning over and we'll go to the next slide, that this is where putting a little bit of money into development can save money on the cost. And again, this doesn't have to be PILOT.

[00:38:10] Ben Brooks: This could be any of our competitors, an in house program that you build an alternative solution. So don't worry about this. We're just using PILOT as a tangible example, because this is real, and this is about PILOT costs, and it's affordable, and it's doable. But this, you could swap out with something totally different.

[00:38:25] Ben Brooks: So this math is a structure, the numbers may change, but the structure you can use regardless of what development or if there's another intervention, maybe it's around wellness or something else, you could also swap that in.

[00:38:39] Azure Rooths: Hey, Admira, can you answer Zoe's, can you just read that out? This is right up your alley. This is a perfect segue.

[00:38:46] Admira Adovic: Yeah. So Zoe, thank you for the comment, but says ours was over a hundred percent. It got so bad that I had to personally calculate some of the costs and found over a million dollars in [00:39:00] losses. Sales due to errors, margin due to drug projects, poor onboarding and training that resulted in additional work.

[00:39:08] Admira Adovic: overtime hours to fix the errors due to poor training. And I can go on.And again, goes back to those little details that we don't think about. We just look at it like, it's just a salary. No, it's not just a salary. It's a lot more. And it goes a long way. I will reiterate exactly what Ben said. And I've seen organizations time and time again, where they're like, Oh, we just have turnover.

[00:39:31] Admira Adovic: Oh, it's because of the salary. And I'm like, they just survey these people because I guarantee you, it's not about the salary. And they did. When they started serving them, they started realizing, oh, it's about, they didn't feel like there was a career development. They felt like that. The culture was not as cooperative, or what's the word that I'm looking for?

[00:39:52] Admira Adovic: Collaborative.

[00:39:53] Ben Brooks: Yeah, I'm tracking.

[00:39:55] Admira Adovic: I'm going to converse with you guys. So it's. [00:40:00] All about the, it wasn't really much so about salary yet. I hear time and time again, using salary as the excuse per se. And then I'm like, no, it's not just a salary. Let's just put the people first and then we'll start seeing a change.

[00:40:13] Ben Brooks: And what I'll say is, so we're talking about this company with a thousand employees, but now you see a hundred, you're like, wait, I thought it was a thousand. Well, my guess is having been an HR person myself. You can't go take on a whole company at once, you have to prioritize and target your investments and your interventions.

[00:40:32] Ben Brooks: So one of the things we're trying to show here is a practical, realistic, real world scenario. So you would think, okay, we have a thousand people that work at this company. Who are the hundred that are the most critical to retain or the most at risk of leaving? And you might know that based on their tenure that people get the itch at three years, maybe on the site that they work in the department they're in, maybe based on their demographics, they're female or people of color, [00:41:00] etc.

[00:41:00] Ben Brooks: So you would say, we're going to target our investment at least initially to prove the case. Right? Into the most critical talent. So you'd say the other 900, we're going to have to think about, but we're going to triage on the 100 that are the most important, right? So based on that 15 percent turnover, if you have a hundred people and you don't invest anything, that left column, right, there's no cost, there's no prevention, so there's no cost, right?

[00:41:26] Ben Brooks: But at 15 percent means a hundred people, 15 of those are going to leave. Right? And then based upon that cost of turnover, based upon those, cost per employee, 77, 000, fully loaded at 31 percent is 101, 000, right? And at 75 percent cost of turnover, multiply all that out, right? You get to a 1. 1 million cost.

[00:41:47] Ben Brooks: Now, again, we are showing honestly, ridiculously conservative numbers here, because the thing is in merit, would you agree that if you show a thing where you're like, we're going to get turnover to zero, there's a little of the bullshit [00:42:00] test, right? People are going to go are you really going to get nobody to quit?

[00:42:02] Ben Brooks: Like, what are you going to do? Lock, chain, lock the exit doors. I think that's part of this math, when you make an argument internally to management, CFOs, to CEOs, you have to show like marginal or incremental improvement, which our tendency is to want to show a dramatic silver bullet panacea cure to cancer, but in reality, you often get a more credible argument when you talk about a marginal improvement.

[00:42:26] Ben Brooks: So in the example on the right, which I'll walk through after I yield the UAD mirror, we're talking about reducing turnover by 20 percentage points, but, 20 percent of 15, which is three percentage points. So it wouldn't go to zero, it would go to 12, right? So instead of having 15 people quit, 12 people would quit.

[00:42:45] Ben Brooks: So Admira, when you think about making conservative or realistic scenarios and projections, does that resonate with finance professionals?

[00:42:53] Admira Adovic: Yeah. And again, I will say that these numbers in my view are conservative, very [00:43:00] conservative. I've seen the numbers higher. So just, I want to reiterate that here.

[00:43:05] Admira Adovic: We're being conservative about the numbers, but this purely means we are saving $130,000 of our profits for the year. And that is after investing in PILOT. That is a lot of money for most businesses. That is a lot of money for most businesses. Of course, I'm like, I'm going to save $100,000 and by doing that you're going to invest it, go for it.

[00:43:32] Admira Adovic: And obviously, I'm going to ask to see the numbers after the fact and make sure that these numbers are lined up, so all of that. But that would have been a solving point for me. It's like, yes, like I would, had this come to my desk and be like, approve this. I'd be like, No, that makes sense.

[00:43:51] Ben Brooks: And I think that's part of what we're trying to answer, fundamentally, is does this make sense?

[00:43:55] Ben Brooks: That's a really good intellectual test, right? Can I talk this through? So this [00:44:00] is why we're going to offer the PILOT team to walk you through this so you can go and make your own ask for whatever it is, for PILOT or something else. It's okay. This is not like, we're trying to enable and equip and empower HR people to feel powerful at work.

[00:44:14] Ben Brooks: And that may be that you're doing something around wellness or college recruiting or something else, right? But the footer here this big green rectangle, right? That if you can spend $150,000, which is, would be the ask. And Admira's your CFO. He said, Admira, I want $150,000 and based on the data, based upon this vendor and this research and things, I think it can reduce our turnover for a targeted population by 20%, which means 15 people goes to 12.

[00:44:43] Ben Brooks: But we have to pay for that, right? But our turnover costs right after the program, we save $77,000 net of the investment, right? Like, you have to build in the investment costs because you can't say we save money. You're like, yeah, but you have to count what you had to spend for it, right?

[00:44:57] Ben Brooks: But you also saved three people. So it's a [00:45:00] double bottom line because, people, Gusto did some research of HR professionals that employees don't hit their peak productivity until year three. So imagine these people are turning in year one or year two, they haven't even really gotten into that flow where they're really know how to get things done.

[00:45:16] Ben Brooks: So you've saved three people, and you've reduced turnover costs. And by the way, you've also developed another 88 people, right? That's sort of the triple bottom line, right? That's where and, that, you know, that you're not only the benefit to a development, right? Isn't just getting three people to not quit.

[00:45:37] Ben Brooks: You're also developing 100 people, and in this case, at the end of it, 88. Right? And they're going to be more capable, more productive, more engaged, as I mentioned, errors and omissions, or other things like that, that, you know, mistakes, etc. So that's where there's you really want to make this argument that it's like multiple prongs, but the more we can root this in math, rather than in like argument, [00:46:00] then people can say, Oh I think, we're, you know, our cost to remember is higher.

[00:46:03] Ben Brooks: We should, why don't we do this for 200 people instead of a hundred, you know, or how did you pick the a hundred? Well, then you're getting the conversation of how do we do this? Not if we do this. So psychologically, it's a big unlock versus yes, no.

[00:46:20] Admira Adovic: Yeah, that's a good point. I want to, I do want to add one thing that I have a experience in my career in finance is that a lot of times finance is like a foreign language. And a lot of times people don't really go to finance with any ask because it's an intimidating department to the point that I have come up with a saying that I kept promoting around that said finance is not the place where dreams die.

[00:46:47] Admira Adovic: Okay. And purposely, because what I wanted the team to do is come to me with a solution, how we're gonna better this company, how we're gonna be able [00:47:00] to be overall a better company through people, through development, through whatever it is. and talk to me in the terms of like how that's going to happen.

[00:47:10] Admira Adovic: It doesn't have to be perfect. You don't have to be perfect or fluent in finance because we are very clear that not everybody, otherwise you would be in our department, right? So you don't have to be fluent. You would just have to be able to prove your point of what are you trying to accomplish? What are you asking for?

[00:47:24] Admira Adovic: And how is this going to better the company?And so I want to make sure that I say that out loud because I've seen it in my career. time and time again, where people just would not even approach us at all. Or they would usually hide behind their executive and then have the executive come to us and talk and they'd be like, it was very easy to talk to.

[00:47:43] Admira Adovic: I'm like, why would you think differently? So again, it's because it has that intimidation, but It's, we're really approachable and we're just, the way we look at in finance is like, how can we better the company. We're not expert at this. You are. Come to us with a solution. And of course, we [00:48:00] want to see some part of numbers.

[00:48:01] Admira Adovic: It doesn't have to be beautiful analysis like Zoe was mentioning. She does it great. It doesn't have to be that, but come to us with a solution and how it's going to impact numbers in some form. And the conversation becomes. And the conversation becomes then about like choices, not so much yes or no.

[00:48:17] Azure Rooths: I love that, Admira.

[00:48:18] Azure Rooths: And Ben, if I can jump in for two quick seconds before we open the floor up to questions. We have done an amazing job. The key phrase here on this last slide is improving retention. So when we go back through the last hour, we were able to link the rate of turnover to its financial impact. We reviewed the metrics.

[00:48:38] Azure Rooths: We've discussed the cost of annual turnover, and we've realized the answer. The answer is simply employee development. Why? Numbers don't lie. The question is, how do you justify the investment? And this is it, ladies and gentlemen, as we move forward [00:49:00] for our last six minutes or so, we want to open to the floor has been said to any additional questions, comments, concerns.

[00:49:08] Azure Rooths: Now is a wonderful opportunity for you to go into the chat and ask your questions.

[00:49:16] Ben Brooks: And what I'll mention that, Amir was pointing to is essentially fear of rejection. We hear from HR people all the time. Oh, we don't have budget. I won't be able to get budget. I'm like, oh how do you know that?

[00:49:27] Ben Brooks: Did you, you were told that? And I'm like, no, they assume, psychologists would call it a negative prediction, right? And it's like, oh I know last time I asked for something for recruiting two years ago, I was told no, or, I wasn't, my budget is this. I'm like I wouldn't worry about the HR budget, right?

[00:49:42] Ben Brooks: There's money in organizations. There's always money. It's just, is there money for your thing? And have you made the best argument? And look, finance has a role to hit the brakes on wasteful spending. People in organizations do things that don't make sense or they're self interested or that are boondoggles.[00:50:00]

[00:50:01] Ben Brooks: And it's important thing that finance hits the brakes on those things. But to Azure's point, this is an investment. So if you have any additional questions that we can walk through in the remainder of our time here today, we'd love to be able to answer them for you or just things that come gnawing at you.

[00:50:16] Ben Brooks: We're gonna have some offers here at the end. But it's one of these things that we want to help you have a very simple sort of traceable thing. And we actually have a whole Calculator and spreadsheet we can walk you through and we'll work through it together because it's helpful to talk these things through with someone to fill in the variables, you can debate some of those things, and then use it to say hey, I'd like to do something because I think it's going to have this impact on our financials.

[00:50:39] Ben Brooks: Almost never is that what finance is greeted with when it comes to HR they're just like it's the right thing to do. It's the right thing to do based upon math, and then you'll be able to show that.

[00:50:49] Azure Rooths: So Ben , Admira, we have one question in the chat. If you can answer it in 90 seconds or less, I will allow you to do so.

[00:50:57] Azure Rooths: So who thinks they have the silver [00:51:00] bullet?

[00:51:00] Admira Adovic: From experience, I want to answer Zoe's question at the same time, collaborate in a bit. Don't be afraid to go talk to your finance team. I will say that the people that I have approved budgets for when after the budgets were even complete with people would come to me with like, I want to do this, but I know the budgets were complete, they would sit down with me and be like, what do I need to do to, I have this initiative in my head.

[00:51:23] Admira Adovic: I know it's going to be good for the company. Help me figure out how can I present it in a way that makes sense to finance. And I was helping them figure this out. And as part of the process, like this is actually a great initiative. And I was more bought into it. So don't be afraid to go to finance and be like, look I know this is good for the company.

[00:51:42] Admira Adovic: Help me help you make a better decision for both of us. So that's one, but then go ahead. What do you think?

[00:51:50] Ben Brooks: Yeah, so I asked, if people are afraid of numbers, right? How do get them to, listen, start with feelings may sound counterintuitive, but, you know, let people like, oh, my gosh, our managers are super burned out.

[00:51:59] Ben Brooks: [00:52:00] People are quitting left and right. People are wondering if they should run. It's a bank run. We have an employee run out the doors. Okay, what's the impact to that organization, right? Could we quantify that? It seems like we're all feeling this. What do we think, if we had to put the feelings into some numbers or financials and start with the feeling and then transition it?

[00:52:17] Ben Brooks: And

[00:52:21] Ben Brooks: Darren's got a, a comment in here as well, right? You know that the organization HR reported under the CFO, our costs were heavily managed, even for justifying backfilling roles, while we had low turnover, barely 5 percent year over year, there was a desire to control our costs. We learned to invest in training to provide people with the opportunity to expand their roles instead of looking to leave given the stability of the company.

[00:52:41] Ben Brooks: This led to some staff becoming qualified for international opportunities and other parts of our business unit and other business units under secondment programming, it actually drove some people back to the original business units to, of course, we're able to see better financial results every year.

[00:52:54] Ben Brooks: So Darren is ding ding frickin ding right there, Darren. Like that, I don't know what I'm even [00:53:00] saying there, but I'm just excited because this is exactly what we're talking about, what Darren pointed to, that even like, it's not like Darren was in this like flush environment, like everything's scrutinized and should we backfill that role and all this, and the turnover number was much lower than the 15 percent we've modeled, and yet still, when they invested in training and development, it had people see the chutes and ladders that is a career journey inside of an organization, right?

[00:53:26] Ben Brooks: It's easier for employees to typically see career opportunities outside on Indeed and LinkedIn than it is to see them inside with their imagination or through conversation. But clearly it improved their financial results and it increased their retention and probably their throughput and their productivity.

[00:53:39] Ben Brooks: So this is not just like fluffy, nice to have things. So Azure, who is this? Who is this handsome guy here? And what is this cool looking QR code? Love it.

[00:53:49] Azure Rooths: Thank you so much for that, Ben. So if you would like to test the calculation for your organization, please reach out to Leighton or take your phone simply and [00:54:00] scan the QR code that you see right on the screen to book a session directly with our team today.

[00:54:06] Azure Rooths: We strongly encourage you to do so and on behalf. of our amazing PILOT team. We just like to say thank you so very much for being here today. You will receive an evaluation after closing out this session. Please take 30 seconds and let us know what you thought about today's session. On behalf of our PILOT founder, Ben Brooks, CEO, and our CFO, Admira, as we move forward to our final slide, we'd like to say thank you again.

[00:54:42] Azure Rooths: I am Azure, Azure Rooths, and I have served as your host. Helen was your producer. If we can help you reduce employee turnover, please reach out to PILOT today. It has been a pleasure to serve you. Remember, you will receive this recording within [00:55:00] the hour. Thank you so much for being here.

[00:55:02] Azure Rooths: Ben and Admira, would you like to say goodbye to our team?

[00:55:06] Admira Adovic: Yeah, thank you, Ben. It's always a pleasure. And yes, thank you everyone for coming in. And yeah, reach out if you have questions.

[00:55:13] Ben Brooks: And we're going to start to do a lot more of this. So if you've got feedback for us, ideas about how to sharpen these things, make them more useful anything else, if you want to be a live example, join a conversation, you know, we want to provide more, I think a lot of HR content and thought leadership and community stuff is real pie in the sky, like robots taking over our jobs and crap like that. And it's like most HR people are not worried about that unless you're maybe in manufacturing or something.

[00:55:36] Ben Brooks: And so you got to think about what do we do now to help the HR person today. And so we're going to try to build a lot more tools like these spreadsheets and schedule, build up things and people, identifiers, et cetera.

[00:55:48] Ben Brooks: So if you've got feedback, we love it, including your ideas. So [email protected], [email protected], our website, et cetera. So, thanks everyone for joining in - [00:56:00] Admira, great, Azure, great, Helen, great. We've got a great team. Happy International Women's Month, day, year, century. Have a great week.

[00:56:09] Azure Rooths: Take care everyone.

[00:56:10] Azure Rooths: Thanks for being here. Bye bye.