There are millions of reasons that employees leave a company. It may be as simple as a change in life situation that takes them in a different direction. It may also have something to do with dissatisfaction or issues with management or coworkers. Have you experienced high levels of employee turnover? If so, do you know why? How much is this turnover really costing your company? Here are some numbers to keep in mind.
High Percentage Replacement Costs
When you replace a current employee you’re not only responsible for the new replacement salary but the high costs involved. We will break down these costs below but the average percentage of the replacement cost for a new hire is between 16 and 20% of that employee’s annual salary. That means that an employee making $40,000 annually will cost your company $48,000 total to replace. An employee making $10 an hour will cost around $25,000.
The Cost of Recruiting
The first step to replacing a lost employee is recruiting. This can add up to the cost of advertising, pre-screening, skills testing, background checks or drug tests, and reference checks. You can mitigate some of these costs by working with a staffing agency who can provide the recruiting and pre-screening process as a cost of doing business. They can also offer temp to hire placements which can allow you to work with a potential candidate and determine if they are suitable to hire.
The Cost of Training
Once the new employee is on board you also have to face the prospect of training them. As much as you want a new staff member to “hit the ground running” this can be a detrimental line of thought. Not only will be they need to be brought up to speed on the job they will be doing but also the way that you prefer the job is done within your company’s processes and procedures.
The Cost of Lost Production
The loss of production doesn’t just start after an employee’s last day. Employee turnover is often a result of burn out and there may be lost productivity for weeks or months before the employee officially quits or you terminate their employment. Then you need to factor in the time it takes to recruit and hire a replacement and the time for their training before they are up to the productivity level you need from this role.
The Cost of Lost Engagement
Employee turnover doesn’t just affect one person. The negativity of a dissatisfied employee will quickly poison the remaining staff in your office if you’re not able to do something about it. It is critical that you work hard to engage your entire workforce and ensure their satisfaction with your company so you don’t need to take on the steps to replace your employees on a regular basis.
Do you want to find ways to keep employee turnover from affecting your company?
Three Pillar Staffing is available to help! Contact out experienced team of recruiters today for more information on employee turnover.