Written by Salary.com Staff
May 21, 2018
Companies lose money when employees leave. There is no doubt that high employee turnover is extremely pricey. However, the cost of losing an employee varies depending on your organization’s data points.
No one likes to lose a great team member, yet employee turnover is an unavoidable reality of doing business. The cost of turnover can be hard to identify but it is essential for organizations to do so. Taking the time to measure the real cost of employee turnover helps organizations have smarter hiring and retentions decisions that greatly impacts your bottom line.
Here are some steps you can take towards identifying the real cost of employee turnover in your organization:
It helps to have all the facts before drawing conclusions. So, assembling a data-gathering team is a good starting point to calculate employee turnover cost. The finance team, HR department, operational coordinators, and team leaders who are most concerned about profitability are often focused on metrics and key indicators. Their insights are invaluable when gathering this data.
Questions to pose to this group include:
Factors to consider:
Factors to consider:
Now that you have your data, the next step is to interpret it. Select a benchmark position to use for verifying the results.
Calculate:
When dealing with busy executives and those outside of the HR arena, rely on visual analytics to tell your story quickly. This can help HR be involved in decision making for budgeting, employee engagement, and programs to enhance employee engagement and retention.
Helpful visualizations include:
Remember, besides hard costs which are more tangible, soft costs from attrition and transition are also significant. If open roles are not filled in a reasonable timeframe, it can lead to more attrition across the department. In a market with less than 4% unemployment, it’s best to invest in proactive solutions to analyze data and alert managers of flight risk, salary discrepancies, and alignment issues.
The real cost of employee turnover can be complex to identify, but it’s an essential part of managing your organization’s long-term success. Use the steps in this article to assess employee turnover’s true impact and develop a plan to reduce it. Taking steps to reduce employee turnover is a wise business decision and can result in increased productivity, morale, and financial savings for your organization.
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