What is employee turnover costing you?
There are many tasks involved in running a successful business. You have to understand your customer so you can provide a product people want. You have to watch your competitors and seek to always adapt to changes in the market, and innovate for solutions. A successful business is always looking for ways to cut costs and increase revenues, so they can grow their profits.
However, have you considered an often untapped source of new productivity and savings: Employee Turnover. Retaining your employees and reducing employee turnover is a crucial part of running a successful business.
Employee retention is important because employee turnover costs time, money and productivity. According to The Society for Human Resource Management, only 33 percent of businesses track employee turnover, which means 67 percent of businesses are missing out on a huge source of savings and growth. The cost to replace new staff can be as high as 60 percent of an employee’s annual salary, SHRM reports. Furthermore, if you factor in the loss of productivity and the cost of training new hires, that number jumps to as high as 200 percent of an employee’s annual salary.
According to the U.S. Department of Labor’s Job Openings and Labor Turnover Report, the number of job openings (around 3.6 million nationwide) has risen from 1.8 percent in October 2009 to 3.1 percent this September. With more jobs available, businesses are at greater risk of losing their best staff to competitors. The highest turnover rates were in construction and hospitality. The lowest turnover rates were in government, manufacturing and education.
Additionally, companies with high employee turnover of skilled employees, such as health care workers and hi-tech positions, may have to wait some time to fill that vacant spot. “Organizations that do not develop strategies for addressing employee turnover may find themselves with pervasive skill shortages to fill the positions in the future,” said SHRM in the Executive Report for its 2011 Human Capital Benchmarking Study.
So what’s the good news? Implementing a plan to retain your employees is a sure way to make your business more profitable and competitive. Understanding why your employees leave, and what benefits and policies could make them stay – is the first step to turnover turnaround. For each relationship fostered and employee retained, a company can save its business real money and avoid disrupted client relationships, delayed customer deliverables and the inevitable lag in overall productivity.