Almost two-thirds (64 percent) of 262 companies surveyed by OI Partners are apprehensive they may lose managers in a better job market. About half of employers (48 percent) are concerned about losing executives. It costs an average of 2.5 times an executive's salary, and 2 times a manager's compensation, to replace them, according to the survey.
Employers are at a greater risk for losing good workers with economy adding jobs at even a modest pace. “There is a lot of pent-up frustration among employees who have survived layoffs, cutbacks, salary freezes, and other givebacks,” says OI Partners Chairman Tim Schoonover. “Some have stayed with their employers mainly because there were no other jobs. But now there are a few more available opportunities. Companies have to demonstrate to employees that they are valued by investing in their career development, or they may lose them,” Schoonover observes.
To bolster their efforts to retain managers and executives, the survey finds that 4 out of 10 companies are offering better salaries and benefits, and more than half of organizations are utilizing training, coaching, and other developmental programs.
In addition to trying to retain good employees, companies need to pay closer attention to hiring and promoting the right people the first time, says OI Partners. The biggest consequence of hiring or promoting the wrong executives is lower morale, according to 81 percent of surveyed companies. Other negative impacts of having the wrong executives in place are: lower worker productivity (according to 74 percent), lost business (53 percent), and higher employee turnover (48 percent). The biggest negative consequences from hiring or promoting the wrong managers are: lower employee morale, cited by 84 percent of companies; decreased worker productivity (82 percent), and higher employee turnover (59 percent).
