Consider the Costs
Is your team or business characterized by a revolving door of people coming and going? Frequent voluntary turnover has a significant impact on your company’s bottom line. Not paying attention to this important metric can also impact morale and productivity among the remaining employees. Studies on the full impact are all over the board, but we do know that true costs vary by wage and role of the employee.
One study found average costs to replace an employee are:
- 16% of annual salary for jobs earning $30-40K per year
- 20% of annual salary for midrange roles earning up to $50K per year
- As much as 200% of annual salary for highly educated executive positions
So what is the real cost of losing an employee? In a recent article on employee retention, Josh Bersin of Deloitte outline factors a business should consider in calculating the real cost of losing an employee. The factors mentioned were:
1. Cost of hiring including advertising, interviewing, screening and hiring.
2. Cost of onboarding a new person, including the training and management time.
3. Lost productivity – time it takes to get to the level of the existing person.
4. Lost engagement from other employees who see high turnover and tend to disengage.
5. Customer service errors – New employees take longer and are less adept at solving problems.
6. Training costs over a 2-3 year period.
7. Cultural impact – When someone leaves, others take time to ask why.
Are you still content with saying, “it’s the norm for this industry?” Do you believe that you can do things differently to reduce turnover and keep your best people? I believe you can. We do a great job of managing the work to get the desired result, but we lose people in the process because we forget to provide the leadership to keep them. Here are just a few things you can do without a lot of extra effort.
- Establish a relationship with the employee. Fifty percent of work satisfaction is determined by the relationship with the immediate manager.
- Show a genuine interest in the employee. Don’t separate the employee from the person.
- Help them see and feel that there is an opportunity to grow.
- Help them see their progress.
- Recognize them. 57% of employees prefer praise from their immediate manager.
- Help them find purpose and meaning in their work. Tell and illustrate how what they do impacts the organization and business results.
- Provide them some degree of control over what they do. Autonomy over Micro-managing.
- Create a safe environment where people feel it is okay to take risks and that making a mistake will not result in punishment or embarrassment.
- Provide clarity and structure.
- Have Fun! Workplaces that have fun are generally more productive and healthier than ones that are short on fun.
- Role model the behaviors you expect. When managers continually lead by example and model traits known to be inspirational, employees respond with increased trust, excitement and buy-in.
Where would you like to go from here? Ready to reduce turnover, and sustain a workforce of long-term, dedicated employees? The HR Workplace Coach is ready to help you develop a no/low cost strategy for a reversal of high turnover.
Comments