Engineering faces up to £9.5bn retention gap over next decade

Two leading engineering bodies, ACE and EngTechNow, have come up with a three point plan for employers to halve the lost productivity impact of replacing employees when they leave.

This includes having promotion ready staff to quickly fill the gaps, focusing on hanging onto new recruits after the first year which is when they are most likely to leave and flexibility so staff can move between departments to replace lost employees.

Without action the negative productivity impact could total £9.5bn over the next decade as the aging workforce retires, people move job and new staff are sought to fill the gaps, according to analysis by ACE and EngTechNow  in a new report - The Retention Gap.

Productivity lost through hand over activities and new staff getting up to speed can top £17,000 per partner or senior director and amounts to £5,128 for engineers, and £4,908 for senior technicians, they said.

The gap is lower when replacement of engineers happens at a more junior level.  For junior and graduate engineers it is £2,912 and for technicians and trainees it amounts to £2,820.

Promoting from within at every level would therefore cut the productivity loss, the research suggests.  

“There are an estimated 1.8 million engineering roles to fill over a ten year period and our figures demonstrate why industry must benchmark itself and adopt best practice,” said ACE chief executive Nelson Ogunshakin. 

“Engineering talent is responsible for delivering so much of our economy, and for achieving so much of government ambitions for the future, that we need to find every opportunity to improve the way we work. Government’s recent publication on UK’s productivity rate confirms an urgent need to match, or improve on, our European and USA colleagues in order to maintain UK international competitiveness.  Industry’s positive response to mitigate or minimise the cost of retention gap will go a long way towards improving productivity.”

According to EngTechNow chief executive Blane Judd the case for preparing a bank of promotion-ready staff – not just within specialisms but for promotions that cross into new disciplines, is unambiguous. 

“Our report highlights some of the best practice underway at industry-leading employers.  Applying those lessons across engineering has the potential to save taxpayers and clients billions of pounds – making the UK more globally competitive,” he said.

“In order to ensure this study of company data represents a true baseline figure, it recognised but does not seek to include less tangible productivity implications – such as the time senior managers spend on recruitment rather than on revenue-generating engineering work

“However, the research did identify the additional costs where there is a delay between an employee leaving the business and their replacement starting.  This can see the lost productivity rise by as much as £3,692 for some positions, on top of the baseline cost,” he said.

The report also found

  • Across this industry, by reducing the need to replace staff by just 1% a year a productivity saving of £520M million could be made.
  • 73% of staff in the industry will never serve a period of more than five years at a company.
  • For every percentage increase in new employees starting at the beginning of the year (as a % of total staff) the cost of recruitment per employee increases by £34.
  • Having an eight week time lag between employees can increase a productivity loss at an average of £1,510 for large companies and £1,243 for SMEs.



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