Protect your human capital
Human capital, the collective knowledge, skills, and abilities of a company's workforce, is arguably the most valuable asset a business can possess.
Despite its importance, however, many businesses overlook the need to protect their human capital, which can lead to high staff turnover rates and a loss of valuable talent. In this blog post, we'll explore the importance of protecting human capital and discuss some strategies that businesses can employ to do so.
The Importance of Protecting Human Capital
In today's highly competitive business environment, attracting and retaining top talent is essential for success. Companies that fail to protect their human capital risk losing valuable employees to competitors, which can have a significant impact on their bottom line. The cost of losing an employee can range from tens of thousands of dollars to 2-3 times the employee's annual salary, depending on their level of seniority and the industry they work in.
In addition to the financial cost of staff turnover, there are also intangible costs that can be harder to quantify. Losing talented employees can lead to a loss of institutional knowledge, decreased morale among remaining staff, and a potential decline in customer satisfaction. These factors can, in turn, lead to a decline in productivity, reputation, and revenue.
Current Labour Market and Staff Turnover Rates in Western Australia
Western Australia has experienced significant fluctuations in its labour market in recent years. According to data from the Australian Bureau of Statistics, the state's unemployment rate peaked at 6.9% in June 2020, up from 5.2% in June 2019. Since then, this figure has plummeted, with the unemployment rate sitting at 3.5%, the lowest it has been in 48 years.
Despite the recent decline in unemployment, staff turnover and mobility rates are at a decade high in Western Australia due to the highly competitive labour market. In a market with very few candidates relative to job vacancies, employers need to have a balanced approach to human resourcing - maintaining a steady flow of new employees whilst reducing the number of employees leaving their business.
Strategies for Protecting Human Capital
So, what can businesses do to protect their human capital in the face of high staff turnover rates? Here are some strategies to consider:
1. Offer Competitive Remuneration and Benefits
One of the most effective ways to retain top talent is to offer competitive remuneration and benefits packages. Businesses should conduct regular wage and salary reviews to ensure that their employees are being paid market rates and offer additional benefits, e.g. increased super contributions or flexible working arrangements.
2. Provide Opportunities for Career Progression and Professional Development
Employees are more likely to stay with a company that offers opportunities for career progression. Businesses should develop career paths for their employees and provide training and development opportunities to help them acquire the skills and knowledge they need to advance in their careers.
3. Foster a Positive Workplace Culture
A positive workplace culture can go a long way in retaining top talent. Businesses should foster an inclusive and supportive environment where employees feel valued and respected. This can be achieved through initiatives such as employee recognition programs, regular team-building activities, and open communication channels.
4. Conduct Exit Interviews
Exit interviews can provide valuable insights into why employees are leaving a company. Businesses should conduct these interviews to identify any underlying issues that need to be addressed, such as poor management practices, inadequate training, or a lack of growth opportunities.
Summary
In conclusion, protecting human capital is critical for the long-term success of any business. High staff turnover rates can be costly both financially and in terms of intangible factors such as institutional knowledge and morale. Businesses must prioritise strategies to safeguard their most valuable asset and maintain a competitive edge in the highly competitive labour market.
