Employees are not just numbers (if you’re a good employer, that is), but there are some facts and figures associated with them. Pay, benefits, bonuses, all factor into an employee’s on-paper worth, as does the cost of recruiting and retaining staff.
Another cost? Constant staff churn, and the lost opportunity and productivity that comes from always-open positions and overburdened staff. That’s why it’s very much a worthwhile endeavor to look at what that costs as well.
Frequent turnover costs money
The cost of turnover ranges widely, depending on who’s crunching the numbers and how they are doing so. It’s bad, though, whichever way you want to slice and dice the data. According to a Society for Human Resource Management (SHRM) study, frequent voluntary turnover hurts employee morale, productivity and company revenue. SHRM found that every time a business replaces a salaried employee, it costs six to nine months’ salary to do so. Other evaluators say that cost is higher.
Other Retention-Related Factors that Affect the Bottom Line
Look beyond the salary issues. Josh Bersin, of Bersin by Deloitte, highlights some of those costs as follows:
- The advertising, interviewing, screening, and hiring spend on a new hire
- Onboarding costs, including training and management time.
- The lost productivity as the new hire ramps up
- Lost engagement, as employees see the churn and opt to exit themselves
- Declining customer service and errors as new employees make the mistakes that new people can make
- Training costs, which can be as much as 10 percent to 20 percent of an employee's salary or more in training over the first couple of years
Frequent turnover can destroy the business
If retention isn’t handled, and your operation becomes a revolving door, it’s not just a matter of employee morale and poor service in the short term. Those problems fuel themselves, word gets out, competitors take advantage and soon you’re gone for good. Employees are the bedrock of your operation, so keeping them comfortable and competent is key.
How to do it? Try a few small changes that yield big results.
- Don’t guess what people want in terms of bonuses and benefits — ask them.
- Pay the going rate, and even a little bit more.
- Bolster your benefits. Yes, it affects profit. And yes, it will keep people around.
And lastly conduct exit interviews. Be ready to hear some tough words, especially if you’re implementing some remedial fixes and sitting across from someone who’s had to suffer in a poor environment. Listen, apologize if warranted, wish them well — and then create an environment that would have kept them on board, happy and productive.
No two companies, and their workplaces, are alike. Ditto the employee corps. You need a customized, adaptable and evolving retention plan. At endevis, we work on crafting those solutions every day. Let’s talk about what we can do for you.