Last Updated on May 21, 2020 by bigfish-admin
Excessive or avoidable employee turnover results in a waste of time, resources, and added costs. While it can depend on the industry and business cycles, the impact is often especially hard on small businesses. Understanding what goes into the turnover costs and establishing helpful strategies are important steps for you to effectively manage the revolving employee door of your company.
Price of Losing Employees. New employee hiring costs often account for business need assessments, advertising, and interview resources. Other factors may include background checks and sign-on bonuses (which are less prevalent with today’s economic market of higher quality candidate pools). In terms of new employee training, costs would include training resources such as technology, reference materials, and trainer coordination.
In short, Total Employee Turnover Costs = New Employee Hiring Costs + New Employee Training Costs.
Reduction of High Turnover. Periodically review the following for your company:
- Recruit Right. Does your business target the right people for your workplace? Getting the right talent is crucial. Matching the right candidates in line with your company branding and long-term business goals is also important.
- Motivate Right. How well do you understand what really motivates your employees? Sometimes, financial incentives may work just fine; sometimes, involving employees in new project developments will be a better investment; and sometimes, it is the simple thank-you. Know what drives your employees at all times.
- Exit Right. Employment termination is a regular part of the employee life cycle. Part of the process includes capturing the real reason(s) for an employee departure can be critical to your company. Whether involving questionable leadership styles, perceptions of unfair pay, or unresolved complaints about the air conditioning not working, getting to the core issue of each turnover will help you assess what corrections you might need to make.
Low Turnover Management. While low employee turnover can be a badge of pride and of a great work environment, Low employee turnover can represent negative warning signs and be actually counterproductive. Turnover, in general, can be beneficial by shifting your business to get new talent with new ideas.
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