Employee Retention: The High Cost of Employee Turn-Over

As I conducted extensive online research it yielded a varying estimate on the exact cost of employee turn-over. According to hrtutor.com, “It costs approximately $50,000 to replace a $50,000 a year worker. The more the employee earns, the greater the expense of replacement. Replacing an executive can cost two to three times their annual salary.” Sbinformation.about.com states, “A general approach to calculate employee turnover cost is to use 50% to 200% of an employee's annual salary.”nTo me and anyone in business the main point is clear quickly; turn-over is a cost and in order for businesses to be as profitable as possible (especially in today’s “sluggish economy”), it’s critical to invest in minimizing costs!nnAny company facing involuntary employee turn-over and experiencing a challenge with employee retention is losing money completely unnecessarily and not operating as profitably as it could. Does your company have an employee retention goal? Clearly defined, one that every personnel manager or supervisor in the organization is clear on and could recite back? Are personnel managers evaluated in their reviews and raises/bonuses based on meeting this employee retention goal? What’s the strategy or how behind accomplishing this goal?nnHere’s why you need an employee retention goal and employee retention strategy:nnThe high cost of employee turn-over includes variables that can be tough to calculate exactly, but considernnRecruitment + acclimation to job/industry/corporate culture = total costnn- Time for anyone engaged in the employee recruitment process (Human Resources, the person’s manager, perhaps others who have to update job descriptions, screen letters of application & resumes, and conduct interviews)n- Did I mention costs to advertise the position? How do you let potential employees know you’re seeking talent? Newspaper ads, flights of radio, exhibiting at job fairs, headhunter/staffing agency (commissions)n- Cost for temporary staffn- Loss of customers and relationships – Ever had someone leave and take your customers with them? Ouch! nnWhen Human Resources are trained on how to recruit the right employees (See www.joyhuber.com/programs for “We Recruited a Dream...But the Nightmare Comes to Work Daily!”) and Supervisors are trained on how to appropriately manage the intellectual capital in an organization (See www.joyhuber.com/programs “Retaining Super Stars for Super Teams”) these groups together can significantly reduce employee turn-over and make a significant positive impact on a healthier bottom line for the company!