Posted on November 8, 2017 by admin
Keeping the costs of your business down, yet providing your consumers with quality products and services, tends to be one of the most crucial business components in the present times. What most of the businesses fail to realize here is that the employee turnover can represent a very considerable price tag to their productivity and bottom-line.
Is Turn Over Costly?
The answer is Yes, turnover is costly, but you need to determine how costly it is and it can be. Research have shown that the cost of replacing a managerial or professional employee runs somewhere between 1.5 to 3 times their annual salary. Moreover, it can cost the business up to 5 times annual salary if you are considering an intellectual capital, as what the employee knows when they walk out the door. The costs are always high and there is not small pocket change!
Thus, in nearly any business situation, growth, stability, downturn or even merger, it surely makes business sense to keep the best people with you. But how to get started?
- Calculate The Actual Costs – This primarily comprise of the direct administration cost of recruitment (ads, assessments, background checks, interviewing, paperwork, orientation, trainings) along with the indirect costs based on the performance differential.
- Demographics Are Important – Understanding as well as combating the turnovers require you to probe into the details. Who is leaving, what departments or job categories are experiencing the most turnover? When are they leaving? Where are they going?
- Keep A Focus – You need to be aware of the fact that not all the turn overs that take place are equal. Looking at the turnover rate of 15 percent annually does not really explain the whole story. Losing an engineer with 15 years’ experience, good relationships with suppliers, strong customer contacts is certainly more disturbing than losing a clerk hired a month ago.
- Identify The Causes – First and foremost, you need to understand the present state of mind of your human resource. Figure out why people are staying and what are you actually doing that makes them stay and work with you. Now, you need to determine what troubles them and lessens their commitment to your entity.
Employee surveys and focus groups are extremely effective to obtain genuine employee feedbacks, to easily identify the push and pull drivers concerning employee’s satisfaction and also helps in coming up with more realistic and practical solutions.
Workforce retention is an extremely complex issue. It is not always about the money, but when people leave for ‘better opportunities’, there would have been some dissatisfactions that caused the employee to put out feelers or start surfing other jobs on board. Assure that this is not happening to your human resources, as you would never want to lose your key people at all.
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