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How High Turnover is Dragging You Down
A certain level of employee turnover is unavoidable. Workers leave for a slew of reasons - they may resign so they can return to school, start families, pursue different career paths or cash in on their retirement plans. And of course, companies may need to part ways with employees who end up not being great fits.
But while a low rate of naturally occurring turnover is ubiquitous across all workplaces, businesses that are constantly cycling through new hires are setting themselves up for some serious consequences. Not only can replacing talent be expensive and time consuming, but the process of getting new hires acclimated can put a very real strain on client relations. Read on to discover some key ways that your organization's high turnover rate could be jeopardizing its success.
The recruitment process is filled with expenses that can quickly add up. First, your company needs to pay head hunters or human resources representatives to conduct candidate searches, a process that carries a pretty hefty price tag in and of itself, especially if travel is involved. Creating advertisements and posting them to job sites, social media and print publications can also be costly. And of course, these expenses can grow exponentially if your business doesn't receive applications from qualified candidates in a timely fashion.
When you finally secure talent that you want to hire, you need to tally up all the costs associated with training and onboarding new staff. If your hiring regulations dictate that you perform background checks or drug screenings, remember that these additional steps are pricey and extend the hiring process even longer.
Productivity also suffers when your business is constantly in a state of employee turnover, and this can greatly impact your company's finances. When you're understaffed you're going to underperform, which means your stream of revenue won't be able to reach its maximum potential.
Overall, CFO magazine reported that the process of hiring a new worker costs roughly one and a half times that person's salary. So if you're having to constantly cycle through employees who earn $50,000 each year, you're looking at replacement costs of about $150,000 per worker.
It prevents customer relationships from growing
When your favorite coffee shop makes the effort to remember your name and order, you're going to remain loyal. After all, it's a lot easier to communicate pre-caffeine if the workers behind the counter already know who you are, what drink you want and exactly how you want it.
Imagine if the cafe's staff kept quitting, however, and you were forced to repeat your selection every morning. You'd have to be patient with new baristas still in their training phases, and you'd probably walk away with the wrong coffee a few times each week. Nothing about this coffee shop would inspire you to remain a committed customer, and you'd probably be motivated to Google other reputable eateries where you could spend your money.
The same concept applies to larger business concepts - companies who experience high rates of turnover are less likely to earn client loyalty. Using market research from two published studies, The Horizons Tracker concluded that workplaces with low levels of staff turnover are ranked higher among consumers than those who are constantly losing and gaining employees. Notably, it didn't matter what the cause behind the turnover was - even businesses whose employees left on good terms still suffered in the realm of client relations.
It leaves you with a lack of expertise
The senior members of your company have put in the time and effort required of leading industry experts. They've forged long-lasting client relationships, helped grow the organization and committed the better part of their careers to bettering your business. New hires, no matter how much experience or intelligence they possess, are still new, and it will take them years before they really know the ins and outs of your workplace and field. According to the Houston Chronicle, companies with lower knowledge bases are always going to be held back compared to businesses with a large amount of tenured staff.
Because the negative effects of employee turnover far outweigh the positive ones, it's vital that your company places a strong emphasis on retaining workers. Invest in competitive salaries, training programs and employee recognition initiatives now to cut down on turnover costs and repercussions.
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