How much is employee turnover really costing you?


EMPLOYEE TURNOVER COMES AT A HIGH COST. 

Turnover is inevitable in these times. It is not like the 1960’s where someone expected to be at their job until their pension kicks in. Today turnover is the number one cost for organizations and here are a few examples of not only cost, but morale as well. 

  • Replacing an employee making $100,000 salary can be more than $213,000; over twice their annual salary! 
  • The cost of hiring a new employee including the advertising, interviewing, screening, and hiring.
  • Cost of onboarding a new person, including training and management time.
  • Lost productivity—it may take a new employee one to two years to reach the productivity of an existing person.
  • Lost engagement—other employees who see high turnover tend to disengage and lose productivity.
  • Training cost—for example, over two to three years, a business likely invests 10 to 20 percent of an employee’s salary or more in training.
  • Cultural impact—whenever someone leaves, others take time to ask why

When using an Executive Search Firm, the first thing you should ask them about is their retention rate on their placements and how long their guarantee period is. If their answer is anywhere from 30-90 days, please just hang up the phone right then and there. Those types of firms are usually contingent and their candidates have a dollar sign on their foreheads. The end goal for these types of firms are a big fat fee, not placing the right person in the right role. 

Another retention strategy is how you interview. What is your process? How many people are involved in interviews? Do you have more than 2 interviews? The suggested amount of interviews for a candidate would be 5-6 before brining them onboard. This shows their commitment to the role and organization prior to them even starting. It will also expose the candidate to more of your team to gain a concensus and it is more of a collabrative hiring strategy.