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Employee turnover is expensive – more so than you might think. When budgeting for employee turnover, some of the costs can be tracked and calculated but others are harder to gauge, like the impact on employee engagement. Easily measurable or not, they all hurt your bottom line. Fortunately, many of the costs of turnover can be measured, predicted, and budgeted for.
The average cost-per hire is currently $4,129, but varies based on time from job posting to hire, importance of position, and industry. Why all that money to hire?
- Recruiting and hiring – position advertising, background checks, other pre-employment testing, internal operational costs for the time taken to market the job, applicant screening, and interviews
- Onboarding – costs of orientation and training materials, additional training and supervisory time for the new employee
- Effect on remaining staff – extra work and overtime during the hiring process, cross-training and time to check the new employee’s work, and the effect on morale after a termination
- Productivity loss and mistakes – time for a new employee to get up to speed
Employees are critical to business – have a plan to retain them. The average revenue per full-time employee (FTE), calculated by total revenue received during an organization’s fiscal year divided by their number of FTEs, is $335,594 (source: https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/2016-Human-Capital-Report.pdf, page 6). Organizations with higher employee engagement experience 41% less absenteeism, 24% less turnover, and 17% more productivity.
How to encourage retention
- Balance work and play – employees are 31% more likely to leave if they feel overwhelmed
- Empower employees – employees who feel micromanaged are 28% more likely to think about leaving
- Create connections – when offered a comparable fake job, 42% of respondees without friends at work accepted, while only 21% of those with friends accepted
Put thought and effort into your recruiting, hiring, and onboarding procedures so you hire right the right time. Engage your employees and retain them longer by building and maintaining a healthy company culture.
For more information on how GTM advises clients on employment issues, contact us at (518) 373-4111.
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