The True Cost of Employee Turnover
The cost of employee turnover can be extremely damaging to a company. There are many factors that go into this cost. The average cost of losing an employee can be as much as double the employee’s salary.
Here are a few of the factors that add up to the cost of employee turnover:
- Finding a replacement. Once an employee leaves, it’s back to square one when it comes to filling that position again. The job must be advertised and promoted. Then you have to look through all of the resumes, screen candidates on the phone and set up interviews with the hiring manager(s). The process can be very time consuming. On average, it can take anywhere from 40-60 days to fill any open position and with the low unemployment rate, it may take even longer!
- Cost of onboarding. Once you have found the right candidate, now begins the onboarding. You spend time on orientation, discuss safety information, benefit plans, etc. Then, they must be integrated and introduced to their new team and managers. Additionally, the IT team has to set up the technology that the new employee might be using. It is said that it takes three to six months to learn a new job.
- Cost of training. Employers spend both time and money on new employee training. New employees have to learn not only what is expected of them in their new position, but they may have to learn new technology, programs/software, organizational processes, and the overall company culture.
- Reduced productivity. The employee who left had reached a maximum production capacity. Now that he/she is gone, the job is vacant with no one performing that work, creating a costly performance gap during the time their role is not filled.
- Overworked current staff. Existing staff is often expected to make up for lost productivity due to turnover. High costs of overtime begin to affect profitability. Plus, as the team gets stretched thin there is potential for the quality of work to decline. Additionally, existing employees suffer from decreased job satisfaction and lack of engagement which could also lead to customer dissatisfaction and further turnover.
- Lost knowledge. Perhaps there are individuals who can do what your former employee did, but may not have the technical skills, specific knowledge or soft skills of the previous employee. Effective and efficient employees do more than put numbers in a spreadsheet, write code, or sell a product – they know the people, traditions, values and mission of your organization.
If your company is experiencing employee turnover of any kind, let us help you! We will investigate and get to the bottom of your problem to help you recruit and retain your most valuable asset, your workforce. Check out of one of our success stories for reducing employee turnover or contact us today!Back to Blog