How many times have you heard a variation on the phrase “People are your most valuable asset?” How many times have you actually thought about this phrase in the process of hiring candidates? It is easy to hear something that sounds good and nod your head in agreement, it is much harder to internalize those words and understand what they mean and how they relate to your organization. However, many aphorisms, like this one, that are repeated and passed along are there for a reason: they’re true. Really understanding why people are the most valuable part of your organization will help you manage your organization better and manage your hiring process in a different and more effective way.

The Cost of Doing Business

How many objects (computers, phones, printers, etc.) in your office require you to spend $30,000 to keep them operational for a year? How many people vital to your day to day operation have yearly salaries of more than $30,000? What would your reaction be if you came into your office in the morning to find that all of your printers had disappeared? Would it be the same reaction if you came in to find that, say, your network administrator had quit?

These questions are important because they serve to illuminate the disconnect between the purchasing of objects for your organization and the hiring of qualified candidates. If you would be more perplexed at the disappearance of objects than people, then there is a problem. If your reaction to both is that they can be replaced then that is also a very serious problem. Studies show that the loss of a crucial employee can cost the company between 70% and 200% of that employee’s yearly compensation, and hiring qualified replacement candidates on your own is always a gamble.

More Than The Loss of One Person

When you lose a crucial employee, the impact ripples through your company. Any unique knowledge that she has is now gone, as well as any personal relationships she had with clients. Those clients may now be inclined to follow her instead of remaining with you out of personal friendship, or out of a lack of confidence after you’ve lost someone that they trusted. By that same token, fellow employees may now have misgivings about the state of the company and may look elsewhere. Whether she quit or was let go, it instills the idea that there are better options out there both in the minds of clients and other employees.

An Alarming Trend

The U.S. Department of Labor has reported that the average tenure of a U.S. employee at a given company has continued its downward trend, now falling at 1.5 years. Why is this? Here are a few reasons