Is lily padding leeching your business of its value?

The dynamic between employer and employee has shifted, with expectations increasing on both sides.

Employees are less likely to stick with a company that they feel is not benefiting their current living situation or long-term career progression.

As businesses look to keep costs down, it is worth understanding the impact of this ethos on retention and the expenses that recruitment incurs.

What is causing the shift towards lily padding among younger employees?

Whereas there was once a time when a person would settle into a job and stay there for their entire working life, younger workers are more likely to take steps to change jobs if they feel dissatisfied with their situation.

The process of moving from job to job is known as lily padding as it mirrors the way that a frog makes its way across the pond.

Like a frog using lily pads, many workers find that lily padding does get them where they need to go.

Gen Z and Millennials have been found to earn 31 per cent more than their peers who remain devoted to a single company and this could explain why, in the first five years of their careers, Gen Z have an average tenure of just 1.1 years in roles.

These job-enhancing techniques spread quickly through social media platforms, meaning that employers face a growing challenge to inspire workers to stay put.

However, many businesses may overlook the true cost of losing members of the team and might incorrectly believe that recruitment is a negligible expense.

How much does it cost to a business to engage in a continual recruitment cycle?

The confusion around recruitment costs is a result of it being difficult to effectively quantify how much a business loses when a key part of the team seeks pastures new.

However, the research that does exist points to it being a difficult expense that would be best avoided when possible.

At the low end, the data indicates that recruitment could cost a business an additional $4,700 (£3,500), but there is some indication that the real figure is likely between 1.5 and twice as much as the annual salary and could amount to 213 per cent of the salary for an executive-level position.

The full scale of the cost is tied to the need to train staff, get them comfortable with the clients, establish new relationships, adapt to working styles and needs, making sure the team continues to gel and handling the impact that the inevitable dip in productivity will have.

The eye-watering expenses become even more painful if the person does not pass probation or if they get frustrated after a year or two and follow in the footsteps of their predecessor – at which point, the entire process begins anew and all of the costs come up again.

Back-to-back recruitment periods can swiftly eat into the profitability of a business and may cost a lot more than whatever compensation would have made the original employ remain in the role.

Having expert accounting support is vital for facing this challenge head-on, as it can enable businesses to understand their financial position so that they can make more informed decisions.

Our team are here to support you by managing your budget with clear financial forecasts that indicate how much your business will be affected by changes to the team or different methods of compensation.

Through this, you may be able to determine the strategy that works best for you and your employees.

Salary increases are not the only option, as you may offer training, flexible working, pension increases or other benefits.

All of this can stem from having an honest discussion with employees, during which you will be better able to address their concerns if you have a clear view of your finances.

To better manage your employment expenses through retention and recruitment, get in touch with our team.