Employee-Turnover Costs: Pull Your Head from the Sand and Take Control!

Posted by in Recruiting, Hiring and Retention | Comments Off on Employee-Turnover Costs: Pull Your Head from the Sand and Take Control!

Employee-turnover costs may not be a problem at your business, but it’s likely to be, since most of the research suggests that less than 50% of businesses have a statistical system to capture, calculate and analyze the cost of losing employees. That, in turn, means ownership is not presented with any data, so the owner can’t make any decisions to reduce employee-turnover costs. Even when these costs are recorded, many companies underestimate, rendering their employee-turnover statistics virtually meaningless and not reliable on which to base ownership decisions.

Employee-turnover costs can be calculated accurately and become valuable business statistics when a system is first planned and implemented. Such a system should include a number of elements.

  • A comprehensive list of which costs will be measured, so the various parts (executive, finance, labor) of the business are making assessments and decisions with common data. That list could contain: exit costs, recruiting, interviewing, hiring, orientation, training, compensation and benefits during training, lost productivity, loss of customers, reduced revenues, administrative costs, lost expertise and temporary worker wages.
  • Meet with your top-producing employees regularly to determine why they continue to work for you, what might cause them to leave and how you can help them to be more productive. Ask the same questions during exit interviews.
  • Employee-turnover-cost assessments can then be done periodically. Make sure to divide your statistics and assessments into three groups: low-wage, middle-wage and high-wage employees. Your analysis will reveal who is leaving and why, and what it is costing to replace them.
  • A method to measure the success of whatever steps you take to control or reduce employee-turnover costs.

Employee-turnover costs that are accurate and recorded, calculated and assessed regularly become valuable business tools for ownership. Now, you are in a better much position to decide which solutions can specifically address, for example, a higher-than-average turnover of managers. Knowing your employee-turnover costs, which solutions you can implement and measuring their results mean you’ll prevent most of your turnover problems. That advanced knowledge is likely to result in more optional solutions and a successful effort to reduce employee-turnover costs.

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