Employee turnover is costly, there is no doubt about that, and it’s a big problem for organizations. In 2010, employers reported an average turnover rate of 11%. However, the U.S. Department of Labor estimated the average national turnover rate was 38%, which is significantly higher. Statistics show that finding and training a new employee can cost anywhere between 25%-200% of the position’s annual compensation.
To put this in perspective, let’s say you’re a small company of 100 employees, and your average employee makes $60,000 annually. Even if it costs you only 50% of that salary to fill the position, you spend $30,000 per exiting employee. Using the lower attrition rate of 11%, this means you are spending $330,000 per year on turnover.
Think about what your company could do with an extra $330,000 per year! Probably quite a bit!
The Other Costs of Turnover
While the monetary cost is frightening and certainly extremely important, it is not the only cost associated with turnover. During the time when a position is left unfilled, you are putting your remaining employees under an enormous amount of stress. When an employee leaves, their workload stays behind and other employees have to pick up the slack. This could result in reduced morale, faster burnout and the overall quality of their work is threatened.
Even if you fill the position quickly, that work will not be transferred over to the new employee immediately. The training and onboarding process takes time. Until a new hire is able to successfully handle the day-to-day tasks associated with a position, the other employees will still have to take on a portion of that workload.
It is often hard to know when an employee will leave your organization, but you can try and be prepared by conducting annual employee opinion surveys. Keep in tune with your employee’s needs, wants and complaints. If you can prevent even one employee from leaving, you will be saving your company money and your remaining employees’ sanity.
Do you have an experience to share about turnover? Leave a comment below!