The Costs of Frequent Employee Turnover

When a company experiences frequent employee turnover, it loses more than just skilled employees. It loses money. Retaining skilled employees is worth a little extra trouble, as the costs of keeping a competent performer in your company are much lower than trying to replace that person altogether. The cost of replacing a skilled employee is right around 1.5 times that person’s annual salary. Therefore, if you have a worker who makes $30,000 per year, replacing him or her will run you about $45,000.

The costs of replacing an employee include the money spent to advertise the vacancy, work lost due to the vacancy, time lost by management to interview prospective employees, and time to train the new employee. Plus, you have to factor in work lost during the new worker’s learning curve period. If you keep that employee by offering a raise, or by making your company a better place to work, then you can save thousands of dollars. If your company experiences frequent turnovers, imagine how much you could save by simply improving aspects of the job and retaining a majority of your employees on a regular basis.

Interestingly enough, frequent employee turnover has more to do with job satisfaction than it does with how much someone may be making. Unless a position in another company offers a significantly higher wage, most employees will stay in a company that offers better benefits or a nicer work environment. When workers are happy in their jobs, they tend to do higher quality work. Simply by fostering a positive environment, you can retain employees with desirable skills. Money will only motivate someone so far; after that quality of life comes in to play.

Luckily, there are a few things that can be done to improve the work environment that are not terribly costly. Purchasing plants can brighten a room, plus they improve air quality in confined spaces. Additionally, studies suggest that they can lessen mental fatigue. Offering benefits like credit union membership, optional unpaid leave, and gym memberships can also improve employee morale. Sincerely praising skilled employees for jobs well done and offering bonuses like a dinner for two or a gift card to a local store are little ways that show workers they are appreciated.

While employee turnover is a fact of life, frequent turnover can be devastating to a company’s profits. Most workers are happy to stay if they feel valued, and feel as though they get more out of their jobs than money. By providing a little extra incentive to employees, you can stop frequent turnover and retain skilled workers, thus maintaining quality and saving the company money