The 3 underestimated impacts of labour shortages

Don’t underestimate the impact associated with the loss of one or more employees, especially in a context of labour shortage. In this first article, we would like to highlight the impact that these departures will have on the company’s finances, organizational culture, business processes and ultimately, on your customers. We want to help business leaders talk about continuous improvement as a way to address this issue in their company. But before we jump to the solution, let’s take a closer look at the scope of the problem.



First, what is a key employee?


Here are the main criteria that make your employees superstars :

  • Proactive
  • Team Spirit
  • Organization
  • Solutions oriented
  • Honest and realistic (e.g. towards the expectations or deadline of a deliverable)
  • Motivated and mobilized
  • Autonomous
  • Learning ability
  • Ally of change management



An Emploi Quebec study reveals that the direct cost of losing an employee is between 0.5 to 2 times the salary of a year of work. Surprised? Let’s look at what can lead to this exorbitant amount.



Calculating the financial impact (direct costs)


Losing key employees has never been good news for an organization; this is even more the case today in a context of a labor shortage. A context where it will be difficult to find someone with equal skills without having to break the bank, reinventthe internal strategies for recruitment or make very unrealistic promises upon hiring.


The most obvious costs are related to the recruitment and hiring of the future employee, as well as all costs related to his training.


What we underestimate.A departure can also lead to a drop in productivity and performance within the department involved, or even for the entire organization. And it goes without saying that this can lead to lost opportunities, depending on the nature of the business.


Considering the impact on business processes and customer relations


The impact of your employee’s departure does not end there. Several indirect costs must also be considered. We don’t brag about key employees leaving. It impacts the credibility of the organization: “What is going on internally? Why have managers not been able to retain their employees?”. Over time (and departures), this can gradually damage the image of the company.



Furthermore, if this employee had a direct connection to customers at the value stream level, then they would be directly affected. Clients risk losing their momentum with respect to the work in progress since they will have to change their resource person, re-explain their various issues, recreate a relationship and bond of trust with them, etc. All of this will have an impact on customer satisfaction. It is also possible that the organization does not have the necessary manpower in place to be able to take over from different clients. The organization could therefore face a reduction of their services.



When it comes to business processes, the organization is at risk of knowledge loss. In addition to the confusion at the level of roles and responsibilities within the departments impacted by the departure.


Being aware of the impact on organizational culture


If your best employee leaves you, hurry up, knock on wood! The last thing we want is to witness a snowball effect. Indeed, some employees are mobilized by their attachment to their team. Some colleagues see a member of the team (generally relatively appreciated by his peers since he is a key employee) leaving, which can now negatively impact their commitment, or even their feeling of belonging to the team and company.



As for the workload, it is very likely that it will increase for the other members of the team. It could be possible to think that it would be profitable for the organization to work with fewer staff for a certain period of time; but on the contrary, it’s the long-term impact that will win out. Why? Because it will be a question of additional pressure for the employees in place, negatively impacting their stress management, therefore the overall employee satisfaction rate.. Then, even when the new employee gets hired, the others have to continue to work extra hard to compensate for the learning curve of the new employee. This will, in turn, affect the morale of the troops; which could tumble into burnouts.. In a recent report released by Microsoft, (2021 Work Trend Index), it is said that 54% of employees currently feel overloaded; while 39% are downright exhausted. In other words, the ideal solution would not necessarily be to make an addition to their current workload.



As an organization, following a “painful” departure, are you currently in a position to target the departure incentives and put in place possible solutions in order to avoid losing your key employees, improve your global retention and to mobilize the troops? If not, it is time to roll up your sleeves and to put together an employee engagement plan. as a solution to employee retention. In addition to looking for an alternative to the common employee engagement survey by considering a continuous improvement solution.