The cost of employee turn over
Weather it is you the employer or the employee that has the need for change. People leave resulting in turn over. Employers can often control when employees are terminated and prepare for the vacancy. But we all have had employees that leave without any notice weather it is due to another job offer, injury, or even death it is a setback for the employers due to the disruption in work flow and the back log it creates.
This discussion is to help you determine the cost associated with turnover, the first step is to determine employee turnover percentage during a given period. For this divide the number of employees who have left by the average number of total employees. For instance, if two employees out of 200 left during the quarter, your company’s quarterly turnover rate is 1 percent.
For this example I will use the Bureau of labor Statistics National average, for turnover of 3.4% quarter, if we use this as the turnover rate for a network of 100 employees, — your network will lose 14 people per year.
When a key person leaves, employers do whatever it takes to find qualified replacements for the organization making sure they are trained immediately through an on demand basis, weather it is web based or live training.
Sadly, other aspects of operations are viewed of as having a lesser effect on the bottom line these positions are thought of as secondary. This is incorrect due to all turnover has effects on the bottom line due to the added cost to any organization. This cost can be as high as 40% of the new hires wages. All too often these cost are absorbed by your network and is very seldom viewed as an area of focus for cost reduction, — it is just considered, “part of the cost of doing business.”
There are some online tools
For this example, let us assume the average wage pays $17.00 per hr. excluding benefits. Your network has a high turnover of 38 people per year. If you use an 11% salary cost it will cost you = $81,563.00 of unproductive expenses a year. This amount is commonly referred to as Hard turnover cost can be impacted by many factors, included are the charges to cover the Separation, the Costs incurred while the position is vacant, the recruiter fees or advertisements incurred if the position is difficult to fill, and the amount of training required for a new employee. Hard turnover cost can be impacted by many factors, included are the charges to cover the Separation, the Costs incurred while the position is vacant, the recruiter fees or advertisements incurred if the position is difficult to fill, and the amount of training required for a new employee. But not all cost can be accurately calculated these cost are known as SOFT (or indirect) costs of turnover, Some of these cost are fairly well known, others are not.
There are also some incalculable effects such as Employee morale issues, disgruntled employee/family member issues, Consumer dissatisfaction with inconsistent service/product support due to high turnover, performance differences that impact quality of product or services. Anything that impact quality of product or services results in increased in claims and/phone calls. So what are you doing to retain good employees?
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