How Much is Turnover Costing Your Business?
Over the past few years, there’s been a subtle but significant shift in offices around the country. With more employees dropping out of the workforce, talent is increasingly hard to find - giving employees the freedom to be more selective about where they work.
More than 50 million Americans quit their jobs last year, and employers hired a record 76.4 million new staff. These staggeringly high rates of turnover are bad news for businesses, threatening productivity and putting pressure on their already stretched budgets.
How High Turnover Adds Up
High turnover doesn’t take long to impact your company’s bottom line. The biggest costs generally come from Human Resources. Upon any termination, some data needs to be processed, and probably an exit interview, too. Then, there’s the cost of the human resources and time that go into the replacement process.
Advertisements may be taken out, or at the very least, someone will have to devote time in their workday to scoping out new recruits. Depending on the position, you may even need to form a search committee or advisory board, which would require regular meetings and resources to accommodate potential replacements for interviews. Then comes the cost of onboarding, orientation, and on-the-job training.
With so many factors at work in just one exit and entry, it’s no wonder that an increase in turnover is so costly. The average cost per hire in the US is around $4,700, and some companies report spending three or four times a position’s salary to fill that role.
5 Tips for Reducing Turnover Costs
1. Run a cost/benefit analysis
Before you can reduce your turnover-related costs, you need to know those numbers. A robust cost/benefit analysis will help managers make data-driven personnel decisions that maximize their resources and minimize waste.
Run the numbers on the following to build a clearer picture of where costs are mounting:
- Costs of advertising for the position and preparing materials
- Time spent on interviews and screening applications
- Onboarding processes
- Training costs, including time allotted and materials needed
Compare this data against the alternatives - can you leave the position vacant and restructure instead? What would that entail? Can you promote it internally? How much would you need to invest in retraining that employee for their new role?
2. Focus on retention
Prevention is always better than a cure. While staff will inevitably get restless, you can keep them as long as possible by creating a work environment that’s hard to leave.
Keep the lines of communication open with your staff so they can come to you if there are any issues, and you can address them early. Hold exit interviews with leaving employees in order to identify any company-wide issues that are driving resignations.
Offer perks such as flexible schedules, regular pay reviews, health benefits, wellness days, and others. Also, be sure to reward your top performers, as these are the people you truly can’t afford to lose. Let them know their efforts are seen, valued, and appreciated.
3. Don’t set staff up to fail
If your workplace is starting to feel like a revolving door, it’s time to do some self-examination. Are you giving your new hires the right tools, or could you do more to ease them into the job?
Some employees may make drastic mistakes at the start and/or quickly become demoralized and overwhelmed because they don’t have the support to succeed. Don’t automatically place these people on probation - examine your own training processes and consider giving your new staff less high-priority tasks.
4. Monitor new employees
No matter what tasks your new hires have, make sure you’re supervising them closely for the first few months. Regular check-ins and work audits are essential so they feel supported as they adjust to their new responsibilities.
Frame these as opportunities to deliver constructive feedback and provide coaching rather than delivering a list of complaints. It’s a manager’s job to mentor and encourage team members, especially the new ones.
5. Invest in employee productivity monitoring software
It’s tough to adequately supervise remote and hybrid teams. Concerns go unaddressed, motivation wanes, and managers are oblivious until a resignation email arrives in their inbox.
Team leaders need to be able to spot when their staff are becoming disengaged. Prodoscore provides that solution, offering unobtrusive monitoring of cloud-based company applications to give managers valuable data around how and when employees are working.
The easy-to-use dashboard monitors engagement with key business tools, such as email and office suites, to provide overall productivity scores for individuals and teams. In this way, managers can see at a glance when there’s a dip in performance and act immediately when they see those productivity red flags.
By catching burnout and other issues early, Prodoscore helps companies reduce attrition and maximize their resources. Contact our team today to find out more or schedule a demonstration.
