Everyone agrees that employee turnover costs a company. Production that would have happened doesn’t while a replacement is recruited. That’s one cost. Recruiting itself — writing a job posting, receiving resumes and going through them — requires expense and time by either the hiring managers or the human resources department. Interviews take time away from other management responsibilities.
It takes every employee time to learn a job. They are not up to peak productivity immediately. Training takes time and expense. Learning the ropes takes time and expense.
Plus, most people say workers surrounding turnover lose some engagement and productivity as well. An employee leaving is always cause for some gossip around the water cooler, even if it’s just to wish the person well. Those chats can cut into productivity.
In addition, a change in the workforce may cause a change in the company culture. It may make those still working less attuned and attentive to their work.
Measuring the Costs
Ultimately, most experts think employee turnover costs from one and a half to two times an employee’s annual salary. So if someone is paid $25,000, the cost to your company could be $50,000.
Want a formula? One handy formula for computing turnover costs is multiplying the number of departures by the average cost of the turnover. The number of departures equates to the number of employees in the company multiplied by the yearly percentage of turnover.
The cost of turnover is arrived at by calculating the cost of:
- Learning and development
- Time role was unfilled
Once you have the cost of these four factors, multiply it by the number of departures.
How Do You Minimize Turnover Costs?
Once you see how much turnover costs, the next question is likely to be: “What can I do to minimize turnover costs?”
- First, respect your employees. Make sure your workforce knows how valuable they are to the company. Reward them with pizza Fridays or employee of the month citations.
- Second, promote those who are deserving. This not only retains them, it boosts morale in your workforce overall.
- Third, use a staffing agency for some or all of your employment needs. Staffing firms are professionals in hiring, recruitment, and onboarding. We can handle all the costs of the job search and placement. We can provide temporary employees to keep productivity high despite turnover. Good temporary workers can be hired if they prove to be valuable workers.
Want a Staffing Agency to Help?
A staffing agency can assist in every part of the turnover process. We’re happy to help. Contact us Debbie’s Staffing today.