The estimates vary wildly, but all human resources experts agree that employee turnover is expensive. As the economy continues to slowly grind in the right direction, more employees may feel better about jumping ship and finding employment elsewhere. This will cost your company big money if you don’t take action.
Take a quick look at the “hard” costs of turnover
1. Administration costs include time spent on exit interviews and termination processes, as well as payroll changes and shutting down of business systems tied to the employee.
2. The work doesn’t stop and the company must either pay an existing employee overtime to cover or hire a temporary worker.
3. Now we move on to finding a new employee by advertising the vacancy, reviewing applications, setting up multiple interviews and making the hire. Depending on the technical proficiency required for the job, this could take a very long time.
4. When the new employee arrives, it’s not likely they will be able to cover 100% of their duties. This means training and more time paid out to the temp above.
What are “soft” expenses?
The “soft” costs are sneaky, and they can leave a hole in your profit bucket for years after the departure of a valuable employee.
Soft costs include
1. knowledge loss.
2. disruptions to workflow and missed deadlines that may require compensation to customers. This also leads to a bottleneck in customer service to deal with the issue.
3. missed days due to stress of the employees covering for the departed worker.
4. damage to morale as employees scramble to pick up the slack and learn another worker’s role knowing that it’s only a temporary situation.
Turnover is not going to stop anytime soon
The Society of Human Resource Management and CareerJournal.com conducted a survey that revealed 83 percent of employees and 56 percent of HR professionals believe it is likely that voluntary turnover will jump with the improving economy. Even though factors such as an improved job market will influence this trend, management still has control over many important motivators of employee turnover.
Taking control of turnover costs
Proactive management will help companies avoid much of the turnover that could be affecting the bottom line. It all starts prior to the hiring process. According to a Harvard University study, 80 percent of employee turnover begins when mistakes are made even before a new employee is hired. Your company needs an effective and well-planed hiring process in place. An ounce of prevention goes a long way right?
Hiring and onboarding
Take a look at your entire process.
1. Start by putting a system in place to capture resumes and information for top talent even when you’re not hiring.
2. Make the application short and easy to complete.
3. Use applicant tracking software to help sort through the resume tsunami surely coming your way.
4. Accurately define everything that needs to be done immediately following the hire. Can you have forms completed, phones and e-mail set up and keys distributed before the new employee arrives? Yes you can.
5. Assign a current employee to “buddy up” with the newbie and make sure that access has been granted to things like organization charts, building maps or anything else that will be important for their new position.
The smoother the transition, the more likely it is an employee will believe that their new place of work has their act together. This immediately sends a message that it is worth staying and being loyal to a great company.
More information on employee retention and applicant tracking is available on the Agile|ATS blog. Check in every week and let us know what else you would like to see.