What You Need to Know About the Cost of Employee Turnover
Employee turnover is an expensive shortcoming of running a business. And while many companies track turnover, when it comes to understanding the reasons and costs behind it, many fail to realize its significance.
Do you know how many team members you lose each year to turnover? Do you know how much turnover costs your Organization?
Consider what you are losing to turnover – valuable talent. Now, think about what happens once someone leaves your company. Job postings, interviews, referral bonuses, compensation for work after hours, education and training – the list goes on while costs keep piling up.
The effects are evident. That’s why it’s far better to retain employees than replace them. To better understand the consequences to the company’s bottom line, here’s what you need to know about the cost of employee turnover.
What Makes Employee Turnover So Expensive?
Employee turnover is expensive because organizations must pay direct compensation for the employee that leaves the company and the following costs of recruiting, hiring, and training the replacement. Additionally, other resources like time, morale, productivity and expertise are also stretched with fewer employees having to do the same amount of work.
Recruitment is a significant cost of turnover. The financial costs can include job post listings and advertising them, hiring recruiters, assessment tests, background checks, and other minor and major obligations. The expenses of finding a replacement will also require time, as it takes organizations an average of 51 days to fill the vacant position.
Additionally, organizations might need to pay signing bonuses and relocation fees which can range from $10,000 to $20,000. Plus, the cost of recruiting, screening and interviewing candidates associated with the HR department. But that’s just the tip of the iceberg.
After an employee has left a company, their work is usually divided among the remaining staff. If team members are already overworked, the additional tasks can severely lower their morale, and they can start showing signs of job dissatisfaction.
More extended working hours or having to work from home can have a severe effect on work-life balance, which can lead employees to question their reasons for remaining at the company. In turn, this can cause even more turnover, as people follow their co-workers merely because they believe it is better for their careers.
It is essential to be active with employee recognition in these situations, to show that all of the work and effort is valued and appreciated.
Costs of Training and Onboarding
After recruiting a new hire, an organization has to go through the onboarding process. The new staff member has to be trained, finish orientation, and ramp-up time, all of which can last up to several months.
Moreover, if the job is company-specific and requires specific knowledge or skill, the trainee will have to receive assistance from other employees which can cost even more time and resources.
And seeing how these employees have been overworked for a more extended period, it can seriously affect their willingness to drop everything and help their new co-worker.
Invest in Your Team Instead
Positive company culture can bring success to your company. And reducing employee turnover is a significant part of that effort. But you shouldn’t stop there. Continue investing in your most valuable resource.
In doing so, you will be able to retain and maintain the best talent at your company. Sounds good? Schedule a demo today.