For companies to prosper in today’s economy and job market, locating and holding onto the best talent is crucial.
Turnover can be costly and the maddening thing is employers have a lot of control over the rate at which people leave their company. Minimizing turnover is particularly vital for small companies and nonprofits that must contend with big companies that have big budgets.
The value of an employee
In order to think about the true costs of turnover, it’s essential to start by determining how much the average employee is worth. Most staff members start out as a “cost” to their employer, as they are generally less productive than their more experienced colleagues, make more mistakes and require constant training. Over time, assuming the proper training and procedures are in place, employees become more valuable – ultimately becoming an integral part of the company.
Now that we have a sense of what an employee is worth, we can begin to dig into the true costs of turnover. When an employee leaves, it results in lowered productivity, with the departure of experienced professionals having a more severe impact than newer employees. Even if a person had only been on the job for a week, any duties they were doing will have to be picked up by someone else.
If your staff had been running at peak production capacity, a departure means overtime, which can quickly lead to employees being overworked. Morale can begin to fall as staff members are stretched thin. This can perpetuate a cycle of turnover as burned out employees start looking for new jobs.
Another cost that is a bit intangible is the loss of knowledge that leaves with an employee. Perhaps the departed employee devised a more efficient way of doing things that others never really picked up on. Or a situation might arise that calls for specific knowledge a departed employee took with them.
High turnover also means more time spent training new employees. Trainers must then spend more time away from their regular jobs to coach a new employee, which means two people are being payed for the productivity of one person.
Finally, there are the costs associated with sourcing new talent. Hiring personnel must review resumes, talk to several people, hold formal interviews and determine the best candidate. If the company works with a recruiter, the costs of hiring new employees are easier to quantify.
It should be obvious by now that holding onto talent and minimizing turnover is vital for today’s companies. Best practices for employee retention include tracking the employee retention rate, a recognition program created with employee input, a high-feedback environment and conducting exit interviews. These practices can help you learn how to keep employees while creating an environment that people want to work in.
At SSi People , we support organizations of all sizes through custom staffing solutions and managed services. Please contact us today to find out how we can help your organization.