Employee retention and turnover may seem like an inevitability for any business. However, when quantitative analysis through an employee cost calculation is examined, the true cost of employment reveals why retention versus turnover should be of utmost importance. Turnover is costly not just in dollars but also in time. Valued and valuable employees are the bedrock upon which businesses build their success.
When a skilled employee chooses to leave their current position in favor of outside opportunities, the business not only loses their expertise. The cost of a vacant office is one that calls immediate attention to the negative results of an unfilled position and its impact on the organization conducting business. Some of those costs included overtime paid to others to complete the work normally done by the employee who left. Any separation costs augment those.
Next, financial costs begin to pile up through the process of headhunting, hiring, and onboarding a new employee, all of which could easily exceed a full year’s salary for the open job. Finally, deeper costs are revealed: those associated with the man-hours necessary for both the new hire process and those devoted to bringing the incoming professional up to speed on their duties. Productivity losses may be the most costly of all factors. All in all, the cost of retention is high, and continued turnover can drive up that cost exponentially.
The threat of that alone should draw a company’s attention to the importance of robust resources devoted to employee retention. Using an employee cost calculator, company leaders can see, study and then understand exactly how expensive turnover truly can be. And that can lead to a paradigm shift: embracing the investments companies can make to reduce turnover, bolster employee engagement initiatives and enhance retention. In the balance, investments in retention programs that, on the balance, are far less expensive than turnover and which lead to positive business outcomes. Simply put, an organization that invests in the retention of their employees is far stronger than one expending untold resources due to turnover.
Managers within an organization can utilize an employee cost calculator as an educational tool. While a company as a whole can begin the work necessary to turn the dial from lost resources through attrition to positive investments in retention, department managers take on responsibility and accountability for lost employees under their supervision.
Organizations who fully grasp the startling results an employee cost calculator reveals are already one step down the road to shoring up their bedrock of valuable employees. From that point, true change in the form of top-down retention processes and programs can occur. Then, through the lowered risk of damaging turning, companies can truly begin to thrive.