Turnover is on the rise. Is that surprising to you? Not just the turnover that comes from layoffs and other involuntary separations. We’re talking about the turnover that hurts the most. Voluntary turnover. According to the Bureau of Labor Statistics, 25 million people quit their job last year. I don’t care what you say, that is a big number. Some will claim that it’s a natural consequence of an improving economy. People are moving on to jobs that weren’t available two or three years ago. Others will rationalize that in any organization some turnover is good. That there are always people who have outstayed their welcome and it’s time for them to move on. The smart leaders out there (you know who you are), will stop and scratch their head and try to figure out out how to stem the tide.
What Does Turnover Cost?
There are two parts to the turnover cost equation. The tangible and the intangible. The tangible part is easy and most HR professionals and hiring managers can rattle these numbers off at the drop of a hat. Tangibles include:
- Advertising costs
- Recruiting fees (if you use an outside recruiter)
- Other hiring costs – including background checks, drug screens, physicals, etc.
It is the intangible cost that rarely gets looked at. The intangibles are also what is draining your organizational resources. Worse yet, you may not even know it’s happening. Intangibles include opportunity costs that are really hard to measure. For example, if you assign three different people in your department a task that helps the new employee get up to speed, what does that cost you in lost productivity from those three people? There’s a cost associated with that and it should be accounted for.
Here’s where the big mistake happens. Some managers DO realize that assigning three people to help costs money and they do what they think is the right thing. They don’t assign anyone to help and they leave the new employee to just figure out what to do. We believe this well intentioned act actually costs your company more in the long run. It costs more because it then takes the new person even longer to become fully productive in their new role. Multiply that across all the new hires you have in a year and the number is sometimes hard to swallow. Remember, a short term slow down or loss of productivity is always better than the long term affect of not doing what’s right.
Want to get an idea of what turnover may be costing your organization? Take this short survey. If you include your email address, we’ll send you a template, customized with your organizational data. You will then have an idea of what turnover is costing you and from there you can make adjustments.