What is the True Cost of Employee Turnover?
There is a saying that it is hard to find good help. Therefore, once a business finds good employees, they should do everything in their power to retain those individuals. Unfortunately, despite everyone’s best efforts, it can be tough to keep people with a singular company. Perhaps their family situation has changed, and they need to move. In other cases, they simply receive a better offer. Because of the frequency of employee turnover, it is important for every company to take note of its true cost. What are some of the different factors that need to be considered?
The Cost of Leaving a Position Empty
The first cost of employee turnover that businesses need to consider is the cost related to keeping a position empty. During this time, there is a significant cost in lost production. When the position is left empty, many tasks aren’t completed. This can cost a company a significant amount of money which hurts their bottom line. Even if that work is shifted to other individuals, it is hard to compensate for a lost position.
The Cost of Training a New Employee
Also, there is also a cost in the price of training a new employee. Training a replacement is not a cheap venture. That employee comes on the books and starts getting paid long before they are a productive part of the company. The training process can take weeks to months during which time the employee is learning and not producing. Then, even after that person is trained, it will take him or her a while to get up to speed. All of this contributes to the cost of losing a trained employee.
The Cost of Overtime
Lastly, there is also a cost in the form of overtime. When an individual is missing, other people are often asked to pitch in and pick up the slack. Even though these extra employees should be praised for their extra work, they are still due to overtime. This means that these are added costs that would not otherwise have to be paid. The cost of employee turnover also hurts in the form of overtime compensation.
Employee Turnover Should Be Avoided When Possible
Even though there will always be some turnover in every company, this needs to be minimized when possible. This means that companies need to make every effort to retain good help when they find it. Strong employees are too often taken for granted. Therefore, try to reward employees for doing a good job. This extra compensation will be rewarded in the form of loyalty, less turnover, and an overall improved bottom line for the business.
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