Digital employment contracts are a must in the ever-changing landscape of business today. Following the COVID-19 pandemic, employees were leaving in record numbers to seek better opportunities. Employee turnover can run high, so HR departments need to be prepared to handle this new reality.
Contract management gives you the tools to turn this change into a benefit for your company. Digital employment contracts make it easy to onboard new employees—both in-house and remotely. It also makes it simple to database and search these employees with accurate information. Contract lifecycle management (CLM) software handles high turnover and remote teams easily.
Pandemic-era employee turnover
At the time if this writing, employee turnover is very high. COVID-19 changed a lot about how employees work. It took time to adjust to remote work, but now a large number of employees are quitting their jobs in search of better opportunities.
The U.S. Bureau of Labor Statistics estimates that 4 million workers quit their jobs in April 2021. Another 4 million left their jobs in July of the same year.
This is a turnover rate across various industries of 57.3%.
This especially high rate of turnover can cost your company thousands or even millions of dollars when you are unprepared.
What is employee turnover?
Employee turnover refers to the number or percentage of employees who leave a company within a certain time period. This will include employees who leave for any reason, whether it be through retirements, resignations, or even layoffs. It typically does not include internal movement to different positions, even if it leaves a temporary vacancy.
The lower the turnover rate, the better. Sometimes, however, you just need to be prepared for the reality that turnover will continue to be high. When you are ready for it, the right technology and digital contracting makes it easy to handle employee turnover.
The high cost of employee turnover
Employee turnover comes with a cost. According to Gallup, “The cost of replacing an individual employee can range from one-half to two times the employee’s annual salary — and that’s a conservative estimate.”
Four factors have the greatest impact on these costs:
- The cost of terminating the employee
- The cost of hiring a replacement employee
- A vacancy cost (how long the position is open and unfilled)
- Lost productivity cost while the new employee is onboarded and trained
One way to reduce this cost is to streamline your process with digital employment contracts. They reduce the time it takes to onboard employees with standardized agreements and easy-to-use digital contracts. It also makes it easy to hire new workers even if they choose to work remotely.
How digital employment contracts can help
Digital employment contracts are a must when dealing with high turnover. But why? There are many reasons that digital contracts will make your life easier and help save on your bottom line.
Digital contracts save time
Digital employment agreements will save you a great deal of time. Template agreements make it easy to design and approve a standardized agreement you can use for new employees. Legal can approve the language and all departments can use the same digital contract. This saves time by:
- Reducing the time it takes to negotiate a contract
- Automatically integrating the digital contract into your CLM system
- Making it quick to search for details in the contract (i.e., party names, date of hire, etc.)
- Creating templates that are agile and adaptable when you need to change them
Digital contracts provide a searchable database
High turnover means a lot of employee information is moving through your system. People are constantly in and out. You need a central data repository to keep track of all of this information.
A dynamic repository makes it easy to capture and secure your employment contracts. It also makes them instantly searchable with intelligent search features. The database unlocks contract metadata you can use to search:
- Employee name
- Employment type
- Date of hire or termination
- Any changes made to the template agreement
- Other information you want to be searchable
A searchable database makes it easy to quickly find the information you need. This saves you time, frustration, and ultimately money.
More organized for multiple levels of approval
Hiring a new employee often requires multiple levels of approval. Human resources or recruitment may help find employees and a supervisor may need to sign off. Other approvers may need to be tied in as well.
Digital contracts in CLM software are automatically organized to make this process simple. It is easy to add approvers or even use @mentions to connect a person to the conversation. This approval all happens in one place rather than scattered across emails or separate systems.
Benefits for SMBs and startups
Digital employment contracts are much easier to handle for small and medium businesses (SMBs). The same is true for startup companies. This becomes even more true when these companies are working with remote employees.
Digital employment agreements help make multiple parts of the process easier, including:
Collaboration with other employees or counterparties
Collaborating remotely is one of the top challenges companies are facing. They are forced to communicate through separate emails or phone calls when using antiquated systems. Information is lost and discussions are time-consuming. Editing or redlining a contract is cumbersome and difficult.
CLM software makes collaboration and redlining easy—even when employees work remotely. Workers can collaborate with other employees or even counterparties to make the process simple and easy.
Accessibility to documents and systems
Remote workers need access to the software to do their job well. Many remote workers are limited by the technology they can access while working remotely. They may not have access to the full suite of tools they could access if they were actually on-site.
With advanced CLM software, employees have access to documents and tools wherever they are. This makes it easy to create and manage digital employment contracts and handle all other aspects of your business.
The best tool for digital employment contracts
Digital employment contracts really are a game changer for businesses. They streamline how you onboard new employees during this time of high turnover. You can effectively manage a large pool of employees no matter how quickly they come and go.
Digital contracts are searchable and easy to build. CLM software can empower your company—whether large or small—to use digital employment contracts to their full potential.
Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.