High Employee Turnover Rates Mean Big Costs for Companies of All Sizes
While many businesses understand that high employee turnover rates mean sinking more money into recruiting, hiring, and training, they probably do not realize that those costs are only the beginning of the trouble that comes with low employee retention. Depending on the type of position you are filling, you may need to spend money on:
Temporary help or overtime hours
Background and reference checks
All in all, the United States Department of Labor estimates that it costs 33 percent of a new employee's annual salary to refill the position. Of course, the cost of a high turnover rate doesn't stop at the obvious costs. It can affect other vital aspects of your business as well, including:
Higher injury rate: Less experienced workers are more likely to make mistakes and become injured on the job.
Lower customer satisfaction: Customers have trouble building relationships with the company if the person behind the desk or on the phone keeps changing.
Lower quality products and services: New employees often lack the experience and expertise to offer your clients the best service and products. Also, if they have less of a connection with your company, they have fewer reasons to provide you with their best work.
Lower productivity: Studies have shown that companies with higher employee turnover rates have lower productivity and less happy employees. It can take months or even years for a new employee to get up to speed.
Staff shortages: High turnover rates mean that your remaining workers are often left picking up the slack until a new hire can be found and trained.
Lower morale: As their coworkers voluntarily leave for other jobs, the remaining employees will often feel less satisfied with their jobs and be less loyal to the company.
Damaged company culture: Money and energy spent on developing and nurturing company culture could be wasted if employees leave regularly and never feel committed to the cause or value of the company.
How can you lower your company's employee turnover rate? Although some changes can be made within the company, one of the most direct ways to reduce turnover is to be sure to hire the correct person in the first place - an employee who will thrive in the position you are trying to fill and who will perform well in the environment you provide. At Real Talent Hiring, we specialize in determining who those employees are. Whether you are hiring for an upper management position or an hourly position, we can help you determine the qualities and values characteristic of your company that you should be looking for in new recruits.
Want to learn more? Contact us today to arrange a preliminary benchmark study or to ask questions about our unique hiring metrics.