How much is employee turnover costing you?

How much is employee turnover costing you?

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Are you facing employee turnover problems in your business? Have you been hiring replacements and carrying on business as usual? You may be overlooking the negative impact employee turnover is having on your overall business.

Business costs

Some basic costs include the agency fees and advertising costs involved in promoting the job vacancy. There are also labour costs involved in creating the job ad, reviewing applications, interviewing, as well as onboarding and training. Existing employees may take on additional workload until you find a suitable replacement. You can also face significant costs from lost productivity.

Reduced productivity

It is possible to split tasks up amongst remaining employees, however heavy workloads can often leave certain tasks overlooked. Their own jobs may also get neglected and projects may be impacted. Once a replacement has been hired it will take time for them to become fully effective in their new role.

Lost relationships and a bad reputation

Employees may have built long-standing relationships with your customers. When that employee leaves, your customers will have to deal with a new member of your team. They may face knowledge gaps or feel like they’re being passed from one employee to the next. This can cause inconsistencies and wasted time, resulting in fraught relationships. Customers may decide to take their business elsewhere or follow your previous employee. Equally if your business gets a reputation for low employee retention rates, you may struggle to be seen as a desirable place to work. This could damage your chances of attracting the best quality employees.

Retraining expenses

You may have paid for your employees training and development which will remain a cost that you will have to write-off if they leave. At the same time, you may need to re-invest again into your new hire.

Loss of tacit knowledge

When an employee leaves, you also lose all their unique knowledge and experience which they have built up over time. This knowledge helped them to do their job effectively and enabled your business to move forward. It can take years for a new employee to become as efficient as their predecessor.

Decrease in employee morale

Remaining employees are often left to pick up the work of those that have left. This extra workload can put additional pressure and stress on them. Productivity could be further affected, and staff can be left feeling overworked and underappreciated. If this happens, more resignations could be to follow.

Steps for managing employee turnover in your business

  • Focus your attention on attracting and hiring the right people. Ensure new employees are properly welcomed into your team and a thorough onboarding process is carried out. This increases the chances of them staying around.
  • Talk to employees and carry out exit interviews to understand where fundamental issues lie. You can then use this information to make some positive improvements. Top of the list may be providing competitive salaries, giving staff career progression opportunities, offering flexible working and providing better leadership.
  • Instead of being reactive to problems, be proactive and identify the motivations behind your staff turnover.

Failing to retain your workers can impact everything from productivity and customer service to your company’s credibility in the markets you serve. That’s why it’s essential to assess your human resources habits before your business faces serious long-term problems.