For businesses to thrive in today’s economy, finding and retaining the best employees is important. This is especially true for small businesses and nonprofits competing with larger businesses and larger budgets, for top talent. Learning and recognition of work plays a huge role in employee retention.
Frequent voluntary turnover has a negative impact on employee morale, productivity, and company revenue. Recruiting and training a new employee requires staff time and money. According to the US Bureau of Labor Statistics, turnover is highest in industries such as trade and utilities, construction, retail, customer service, hospitality, and service.
Losing a salaried employee can cost as much as twice their annual salary, especially for a high-earner or executive-level employee.
Turnover varies by wage and role of employee. For example, a CAP study found average costs to replace an employee are:
What makes it so hard to predict the true cost of employee turnover is there are many intangible, and often untracked, costs associated with employee turnover.
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In an article on employee retention, Josh Bersin of Bersin by Deloitte outlined factors a business should consider in calculating the “real” cost of losing an employee. These factors include:
One of the reasons the real cost of employee turnover is an unknown is that most companies don’t have systems in place to track exit costs, recruiting, interviewing, hiring, orientation and training, lost productivity, potential customer dissatisfaction, reduced or lost business, administrative costs, lost expertise, etc. This takes collaboration among departments (HR, Finance, Operations), ways to measure these costs, and reporting mechanisms.
So, what can you do about employee retention? Some employee retention tips include: