Most businesses, especially small and medium ones, do not have always have an accurate idea of how much employee turnover can cost them – it’s usually a lot more than what they estimate.
There are a number of additional costs that the business has to bear when an employee leaves, and they can add up incredibly fast. Let’s see exactly how high employee turnover exposes your business to additional costs.
Recruitment Costs
As an employee leaves, the business has to carry out a number of functions to be able to fill that position with a new hire. These may typically include posting job listings, hiring recruiters, sponsoring events, and offering referral bonuses.
Furthermore, there may be assessment tests, travel expenses related to vetting the candidates, and background checks, all of which add to the costs that the business has to bear.
It takes about 51 days on average to fill up a vacant position, during which, considerable resources are spent on the entire process of recruiting, screening, interviewing, and hiring the new candidate.
Decreased Productivity and Morale
As one employee leaves the organization, there is an unavoidable vacuum created which will have to be filled in by the rest of the employees while the HR works to fill up the vacant position. The other employees will absorb the responsibilities of the outgoing employee, which will most likely over-burden them.
Furthermore, when a business is short-staffed, it will find itself struggling to get things done, and there will always be tasks that are put on the back-burner. The overburdened employees, on the other hand, will likely lose their desire to work and will see a slump in their productivity. In a few cases, turnover can kick off a dangerous cycle of additional turnover as employees follow an outgoing informal leader to other places.
The Costs Associated with Training and On-Boarding
The cost of hiring a new employee doesn’t end at the recruitment phase. After finding a new hire, the business must put them through orientation and training. Naturally, the new employee will not be able to match the productivity and knowledge of the outgoing on. As such, it will be a while; usually several months before the new hire matches the productivity levels of the outgoing employee.
Lost Institutional Knowledge
A strong employee is more than just a productive worker that works efficiently. He or she goes above and beyond the job role as they imbibe the company culture, learn the ways of the organization, and more. Developing such institutional knowledge naturally takes time.
The costs of such a loss of institutional knowledge can, at times, even exceed an employee’s annual paycheck, depending on the seniority and responsibilities of the outgoing employee. As such, these outgoing employees can leave considerable knowledge gaps for the organization as they exit the company.
If you want your business to minimize employee turnover, inclusive employee benefit is something you should consider in today’s environment. Schedule a meeting with any of the specialist consultants at JS Benefits Group.
