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Taleo Research Finds Investments in Employee Engagement Today Will Yield Savings Tomorrow

Latest Analysis of Economic and Talent Research Suggests Action Needed Sooner Than Later to Retain Top Talent (December 06, 2011)

DUBLIN, CA -- (Marketwire) -- 12/06/11 -- Companies that invest in their employees during these uncertain economic times will face lower future talent turnover costs, studies from Taleo Research have found. According to findings by Taleo Corporation (NASDAQ: TLEO), the global leader of SaaS-based Talent Management solutions, companies can save in the long run by investing now in compensation restructuring and training to improve employee engagement. Taleo Research estimates a company that loses 500 employees during the economic recovery may face turnover costs of $75 million, while a company that spends $2 million raising employee engagement could avoid these costs and see an ROI of 3,650 percent.

"Though the overall unemployment rate remains at 9 percent, there is a strikingly healthy market for knowledge workers, many of whom are just waiting to make a move," said David Wilkins, vice president of research at Taleo. "We see the mix of low unemployment among knowledge workers, low quit rates and historically low levels of training and development forming a perfect storm for massive turnover. The investment companies make today in retaining their best talent will directly impact the cost of dysfunctional turnover once the economy recovers."

The Facts Are Clear - Employees Think the Grass Is Greener

While the overall unemployment rate in the US remains stubbornly high, unemployment among workers with bachelor's degrees -- often corporate America's future leaders -- is only 4.2 percent as of mid-September. Recent surveys have found that most employees would leave their current job if they could, and near majority say they are not engaged in their current work. This data, along with other key figures on employee sentiment outlined in recent Taleo Research blog posts, paint a picture that companies are on the cusp of a talent hemorrhage:

  • Employees are not happy: A Gallup poll found at the average big firm only 33 percent of employees describe themselves as fully engaged in their work, while 49 percent say they are not engaged and 18 percent say they are "actively disengaged."
  • Employees are afraid to leave: The US Department of Labor shows historically low quit rates for the last few years. Quit rates are down by roughly 40 percent versus baseline numbers, which indicates that employees who want to leave their current job are not yet leaving.
  • It's only a matter of time: Recent surveys have suggested that 4 out of 5 employees would leave their current job if they could, but are waiting until the job market improves, and 25 percent are planning to leave their job within a year.

Curing Dysfunctional Turnover

The recent Taleo Research study "The US Economic Recovery and Dysfunctional Turnover" describes the typical drivers of turnover -- lack of training, opportunity and growth -- and also suggests some remedies. It may seem counter-intuitive, but the answer to the problem of low engagement isn't necessarily higher pay, but more challenging work. Five decades of research show that the best way to engage employees and motivate higher performance is to provide more opportunities to develop mastery, to learn new skills, and exercise autonomy. In other words, the best short-term strategy for retaining your top people is to provide new opportunities and new challenges, through talent mobility and development programs. Experts agree companies that employ the principles of talent mobility commonly see higher employee engagement, retention and stronger business results.

"Employee engagement, although not publicly reported like fiscal indicators, is a metric that can significantly contribute to a firm's competitive advantage," said Josh Bersin, Chief Executive Officer and President, Bersin & Associates, an Oakland-based HR research and consulting firm that plans to publish a study on employee engagement late in the first quarter of next year. "An engaged employee is committed to their job and the company -- the potential cost savings in retention and the financial gains realized through higher employee productivity makes engagement integral to an organization's strategy."

Spend Now or Spend a Lot More Later

According to the Taleo Research report "Profitable Talent Management," it's time to begin a significant reinvestment in employee and leadership development, talent mobility strategies, and reward and compensation models to increase engagement and retain key employees. Companies that invest in talent mobility can find tremendous potential upside to both the organizations' and employees' performance when existing employees are optimally matched with other positions within the organization. The report finds several key benefits to employing talent mobility strategies to retain key staff:

  • Faster time to productivity: Internal hires have a dramatically lower time to productivity, up to 50 percent faster.
  • Better employee engagement: Highly engaged employees are more than twice as likely to be top performers than are other employees.
  • Increased Business Results: Increasing the engagement in a 10,000 person organization can boost the bottom line by an estimated $40+ million.

About Taleo
Taleo (NASDAQ: TLEO) helps organizations improve the performance of their business by unlocking the power of their people. Taleo is the only company to provide industry leading solutions in every category of Talent Management. Through its cloud-based platform, Taleo optimizes recruiting, performance management, learning and compensation -- and integrates them all so managers have the insights they need to achieve talent intelligence. Customers also plug into Taleo's unique Talent Grid community to harness the power of proven best practices, millions of users, and Taleo-ready partner solutions. From small and medium sized businesses to large enterprises, more than 5,000 organizations rely on Taleo every day to pursue growth, innovation and customer success.

Forward-looking Statements
This release contains forward-looking statements, including statements regarding general global and economic trends. Any forward-looking statements contained in this press release are based upon Taleo's estimates and expectations and are not a representation that such estimates or expectations will be achieved. These forward-looking statements represent Taleo's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Taleo disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Further information on potential factors that could affect actual results is included in Part II, Item 1A of Taleo's Quarterly Report on Form 10-Q, as filed with the SEC on November 9, 2011, and in other reports filed by Taleo with the SEC.

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