The High Cost of Turnover
The High Cost of Turnover
Turnover rates vary from industry to industry, but what is true across all companies is that the cost of employee turnover is high. The Society for Human Resource Management estimated that it costs $3,500 to replace just one $8-per-hour employee. That cost includes recruiting efforts, interviewing applicants, the hiring process, training and reduced productivity — this cost is significantly higher for mid-level and specialized employees.
Not all companies consider the high cost of turnover because the cost isn’t as easily recognized, and some consider it inevitable. But the time and energy managers could be using to work and improve their departments is instead used to take part in the selection process for a new hire.
What is the best way to prevent high employee turnover? There are several effective ways to address turnover rates, but the first is to start by hiring the right person. Sequoia Personnel specializes in finding candidates who will stay for the long term for this reason — hiring the right person for the job means she is more likely to feel satisfied in her position, making it less likely she will leave.
Some turnover is unavoidable, and it can also be beneficial if the person leaving was not the right candidate for the job. However, several companies have managed to keep their high-potential employee turnover rate at less than 1 percent by providing incentives to stay. This goes beyond offering the usual retention bonuses and equity plans.
According to Human Resource Executive Online, many top companies are preventing high turnover by increasing the involvement of their top talent and other staff. How? First, these companies assessed their employees’ skills to find out who had the most potential, as well as which positions were the greatest flight risk.
Then, instead of just offering economic advantages to prevent attrition, business managers sat down with each assessed employee to discuss what the company’s current and future strategies were, as well as where each employee stood and how they could reach their career goals within the company. This increased the buy-in of individual employees, and gave them a sense of where their job could head if they stay with the current company.
Another common element of low turnover rates was creating a plan for employees to develop their skills, which sometimes included mentoring programs and other experiential learning possibilities. High-potential employees were often given leadership roles on special projects to keep them motivated and interested in their job, along with opportunities for advancement down the road.
Offering other perks, such as telecommuting (discussed below), may also be appropriate. If you are unsure where to start, listen to the needs of your employees — they will often tell you their career needs when asked. With that knowledge, you will have a starting point for your retention efforts.
The information provided in this blog is intended for general information purposes only. Readers should seek the help of an HR professional for guidance on specific issues.