When you think about what makes a business successful, your mind might jump straight to financials, technology, or strategy. But none of that matters without your people. For too long, succession planning has been a process of filling roles and managing turnover, focusing heavily on numbers while ignoring the human side.
Now is the time to evolve our approach to succession planning and talent management, focusing on well-being and the human experience. This shift is especially relevant for New Zealand and Australian businesses, where the tight talent market makes retention more crucial than ever. However, how do these regions compare to the US and UK in terms of turnover trends?
The Real Costs of not Developing your People
The bottom line is that in all cases, people cite their key reason for leaving as a lack of opportunity to grow. When this happens, you lose so much in your organisation. The financial cost of turnover remains a significant concern for businesses in Australia and New Zealand. Recent data from HRD Australia indicates that the average cost of replacing an employee in Australia is around AUD 23,000, which can increase up to AUD 40,000 for more specialized roles due to the combined costs of recruitment, onboarding, and training.
In New Zealand, turnover costs are similarly high, ranging between NZD 20,000 and NZD 50,000 per employee. Lately, some organizations have also opted to reduce staff numbers to manage costs, which has added pressure on those who remain. This has been evident, particularly in the Government Sector, as moving deckchairs results in bums being moved off seats. But have you kept the right bums, and are they in the right seats? Humans are hard-wired to grow, and knowing their internal career opportunities and how they fit goes a long way to not only wellbeing outcomes, but a passion to deliver.
The challenges faced in New Zealand and Australia reflect broader trends seen globally. The cost of turnover is not just a financial concern but also impacts team morale and institutional knowledge. Effective succession planning is critical for maintaining stability and ensuring a strong leadership pipeline.
Comparative Costs of Turnover
| Region | Average Cost to Replace an Employee | Specialized Roles | Source |
|---|---|---|---|
| Australia | AUD 23,000 – AUD 40,000 | Higher for IT and healthcare roles | HRD Australia 2023 Report |
| New Zealand | NZD 20,000 – NZD 50,000 | Higher for rural positions | 2024 New Zealand Staff Turnover Report |
| United States | USD 20,000 – USD 50,000 | Up to 50% of salary for senior roles | Society for Human Resource Management (SHRM) 2023 |
| United Kingdom | GBP 12,000 – GBP 30,000 | More for roles in London and tech | Chartered Institute of Personnel and Development (CIPD) 2023 |
This table highlights the cost of turnover in each region, emphasizing how the challenge of replacing employees affects businesses globally. For companies in New Zealand and Australia, the costs align closely with those seen in the US and UK, underscoring the need for effective succession planning and a focus on well-being to manage these expenses.
Why Well-Being Should Drive Succession Planning
The financial burden of turnover is only part of the story. Equally important is the impact on morale and team cohesion when a business loses key staff members. Succession planning has to go beyond preparing for retirements or promotions—it’s about ensuring that employees feel valued throughout their time with the company.
When companies focus on employee well-being, they build a supportive culture encouraging engagement and loyalty. This becomes even more crucial in Australia and New Zealand, where the talent pool can be limited. A 2023 Gallup report revealed that organizations with high employee engagement experience 41% lower absenteeism and 17% higher productivity. This suggests that investing in well-being helps with retention and boosts overall organizational performance.
Well-being initiatives can include everything from mental health support to flexible working arrangements. For example, in New Zealand, many companies have adopted remote work options and mental health days to address their employees’ pressures. These changes have helped reduce burnout and made succession planning easier by creating a more stable and committed workforce.
Leadership’s Role in Human-Centered Succession Planning
One fundamental similarity between New Zealand, Australia, the US, and the UK is the emphasis on leadership as a driver of successful succession planning. Studies have consistently shown that poor leadership is a primary reason for turnover. For example, Gallup found that about 50% of employees leave their jobs to escape poor management, a trend that is observed globally.
Effective leadership development focuses on emotional intelligence, active listening, and supporting work-life balance—key elements that can improve retention. Companies build stronger teams and reduce turnover by cultivating leaders who prioritize empathy and well-being. This approach is increasingly seen as vital for effective succession planning, ensuring that leaders are prepared to manage the human side of the business.
In New Zealand, succession planning that incorporates well-being strategies can help businesses navigate talent shortages, particularly as record numbers of Baby Boomers retire. Companies can ensure long-term growth and stability by developing a pipeline of future leaders who value employee well-being.
Well-Being is More Than a Perk: It’s a Strategy
In Australia and New Zealand, well-being is increasingly seen as an integral part of succession planning, not just an optional perk. This trend aligns with efforts in the US and UK, where well-being programs have become central to talent retention strategies. But well-being is more than offering free gym memberships or snacks in the office—it’s about creating a culture where people feel mentally, emotionally, and physically supported.
What does well-being-focused succession planning look like?
- Flexible Working Arrangements: Supporting work-life balance through remote work options, flexible hours, or even mental health days can significantly reduce burnout.
- Mental Health Support: Providing access to counselling services and creating a culture where employees feel safe discussing mental health challenges strengthens succession planning pipelines by keeping key talent engaged and resilient.
- Career Development Opportunities: Offering training, mentorship, and leadership pathways clearly outlines the company’s future. Employees who see growth opportunities are more likely to be committed long-term and prepared for future roles.
The New Zealand Ministry of Business, Innovation, and Employment (MBIE) has identified employee well-being as a key driver of retention in their labor market research. Businesses that integrate well-being into their succession planning strategies can retain staff longer and boost overall productivity and engagement.
The Way Forward: A Human-Centered Approach to Succession Planning
Traditional succession planning focused on filling leadership roles when vacancies arose. Today, the focus is on developing people throughout the organization, ensuring they are ready for the future. In New Zealand, Australia, the US, and the UK, companies recognise the value of personalized career paths and ongoing development.
Investing in well-being and leadership development can offer a competitive advantage for businesses in New Zealand, where the market is feeling the strain from economic shifts and staff reductions. Rather than simply aiming to fill roles, organizations can ensure they are nurturing future leaders who are engaged and aligned with the company’s values.
Human-centred succession planning is about more than just filling positions—it’s about ensuring that you and your employees see a future with your company. By prioritizing well-being and building a culture where people feel supported, organizations can create resilient teams that are ready for any challenge.
Final Thoughts: Moving Beyond Traditional Succession Planning
So, how can businesses in Australia and New Zealand align with trends seen in the US and UK? By moving beyond traditional succession planning and integrating well-being into the strategy. This means investing in leadership development that prioritizes empathy and work-life balance. It also means recognizing that retention isn’t just about keeping numbers up—it’s about valuing people and preparing them for the future.
When succession planning includes the human element, it becomes a commitment on both sides and results in everyone pulling in the same direction because they want to.
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