You work hard to recruit and hire the best employees that you possibly can. It’s only logical that you want to keep these employees engaged, happy, and working well on your team.
Employee turnover can be an inconvenient, time-intensive challenge. But employee turnover costs even more than time: it costs money.
Costs of Employee Loss
The costs of employee turnover are both tangible and intangible. These costs include separation costs and replacement costs.
Separation costs can include:
- Costs incurred for exit interviews
- Administrative functions related to separation
- Separation/severance pay
- Increases in unemployment compensation
- Lost productivity
- Lowering current employee morale
- Decreased customer service
- Disruption to the organization’s ability to operate efficiently and effectively
- Increased over-time or temporary employee costs
- Loss of workgroup synergy
- Performance differential (the loss of skills and knowledge between the separated employee and the new hire)
Replacement costs can include:
- Attracting applicants
- Entrance interviews
- Employment Testing
- Pre-employment administrative expenses
- Medical exams, drug testing, background checks
- Training costs
SHRM estimates that it costs $3,500.00 to replace one $8.00 per hour employee when all costs were considered. Of course, the higher the wage: the higher the turnover cost.
Now you know the cost of employee turnover. Check back next week to learn more about how to prevent turnover by retaining great employees in Part II of this series: Employee Retention: Keeping Top Talent.
Recently, I turned 48. Forty years ago, the age of 48 looked and sounded ancient. When I hit my 30s, it no longer seemed so old. I’ve been seeing a lot of stories recently about people I know or know of who are dying in their 50s and 60s. As I look at my two daughters, I grow more concerned about the prospect of only being on this planet for another 10-15 years.
Every morning I curse my 4:55 a.m. alarm when it wakes me so I can meet my buddy Kurt for our 6 a.m. workout. Having a workout partner helps on those cold Cleveland mornings — and there are many! However, as I was making that trek in to work out, I thought how lucky I was to be working for a company that values employee wellness the way GMS does.
Healthy Employees are Productive Employees
When an employee calls to say they woke up feeling like death warmed over, do you have to tell them to drag their butt to work because your company doesn’t have a Sick Time Policy? Or when you receive vacation requests, do you have to think twice about how to track it because your Time Off Policy is so complex? Unfortunately, many would answer yes to these questions because of inefficient Paid Time Off (PTO) Policies.
Virtually every company in America is bound by the Federal Labor Standards Act of 1938 (FLSA).
This law "regulates the status of employees (versus independent contractors) and provides for a minimum wage and overtime unless the employee meets an exempt classification." However, the scope of this law is not simply limited to employees’ wages.
Protecting Whistle Blowers
In a former life I was a general manager. A large part of my position was screening and interviewing potential new hires. This important yet time-consuming process included:
- Phone screening
- Background checks
- Scheduling initial interviews
- Clearing my schedule to make time for interviews
- Conducting interviews
...you get my point.