How Much is Turnover Costing Your Company?

Gone are the days when someone joined a company straight out of school and remained there until retirement. According to the Bureau of Labor Statistics, the average American now spends just 4.6 years with an employer before moving on to greener pastures. That means you can expect to hire new employees for the same position every few years. Employee turnover is costing you much more than just money.

Dollars and Sense

The American Center for Progress recently released a study that estimated the cost of losing an individual employee is approximately 20 percent of their annual salary. For example, an employee receiving compensation of $150,000 per year equals a loss of roughly $30,000, and it doesn’t end there.

Knowledge Loss/Skills Gap

Of course, there will be other qualified individuals capable of successfully doing the job, but even if there is an opportunity for knowledge transfer, there will still be a skills gap. No two people are the same, nor would you want them to be. But there’s more to a job than just repeating the actions of the last person in the role; there’s more to payroll than just calculating hours worked. The subtleties of the position, the nuances of the departing employee’s day are often missed in even the most diligent of knowledge transfers.

Burden to Remaining Staff

Whenever someone leaves a company, remaining employees often feel the added burden of picking up the slack. Even when a new employee starts immediately, they won’t be up to speed on day one. Current staff members will be required to step in and keep things moving, as well as provide assistance to help your new hire settle into their new role.

Lower Staff Morale

Change is difficult and can be very disruptive to staff. And if your turnover rate is uncommonly high, it can result in lower productivity from remaining employees. No one feels motivated to excel if co-workers are steadily heading for the door.

Separation, Recruiting, and Onboarding Costs

Finalizing an employee’s tenure with your company will require additional HR efforts, putting extra demands on an already busy department. Activities such as drafting & placing advertisements for new staff, time spent in interviews, and training a new employee can all take away from your bottom line. And don’t forget about decreased productivity while everyone is adapting to the rhythms of having a new person in the mix.

No matter how you look at it, turnover is costing you. No company can expect to keep every employee from day one, but implementing a strong employee retention strategy will only help you in the long run. Maintaining a low turnover rate will keep productivity and morale high. The money you don’t have to spend hiring and training new employees will find better use building up your business.

If you need help developing a winning employee retention plan, let the veteran staffing professionals at Morris Bixby share their expertise with you.

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