Employee turnover is disruptive, expensive and has both tangible and intangible effects.
Like in an iceberg, the tangible effects are visible above the water. Meanwhile, the intangible effects appear underneath, less visible yet often quite larger than it seems.
Staff turnover is more than filling up a job vacancy due to attrition. In fact, the costs exceed the average cost to hire a new employee.
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How expensive can a turnover be?
Aside from measuring how much it costs to hire and train a new employee, other factors to employee turnover also exist. When added up staff turnover can cost as much as 1-2 times an employee’s salary or $50k-$100k on average per hire. Here are some more interesting pointers:
- When measuring attrition cost, anticipate that the expense of employee turnover varies within the organisation. The costs of replacing an employee rise from entry-level to more senior management and executive positions.
- While hiring expenses go up the ladder, employee turnover cost goes up, too. Hence, for the CEO of a major corporation, the price can be in the millions as reflected in the share price and market capitalisation.
- In the Australian construction industry, turnover costs around twice the profit generated by an employee.
Strategies to reduce employee turnover
Excessive staff turnover distracts management, can eliminate profit and cause business failure.
Hence, how do we minimise the hefty cost of replacing an employee?
- Have a strong and supportive culture
- Have strong leadership and management aligned with your work culture
- Recruit the right people
- Implement strategies to engage and retain the right staff
- Have strategies to engage all disengaged staff
- Have strategies to reduce actively disengaged staff
Employee retention now becomes a big issue. Let us turn the tide and avoid the iceberg that may soon sink our ships. For more information on how to reduce Staff Turnover costs, contact Neil at 1300Hired.