You Aren't Counting All the Costs of Turnover
Employee turnover is a killer.
It hurts you in so many areas and it’s criminally overlooked by leaders.
If only there were a menu of costs, so you could be aware of the negative impacts of turnover ahead of time. Well, in this post, I list the costs of turnover that you are overlooking.
The Costs of Turnover
Let's jump into it. I've broken the potential turnover costs into categories below. Get your calculators ready!
Labor Costs
Turnover has direct labor costs. This includes time ($$$) spent on:
- Preparing the job posting
- Resume scanning, phone screens, interviews, reference checks, meetings
- Trainer’s time doing onboarding and training
- Trainee’s time in onboarding and training and being unproductive
- Managers spending additional time helping new hires integrate (personal conflicts, extra coaching time)
- Cost of overtime incurred due to the vacancy
Potential Post-Separation Claims
- Costs associated with state unemployment
- Separation agreement (severance) costs
- Post-termination legal claims
- Lost productivity/lost income due to the absence
Lost Productivity
- Impact of the reduced productivity or culture damage caused BEFORE the person quits or is fired, which can last for weeks or months
- Lost institutional knowledge, sales leads, or clients
- The cost incurred until the new hire is fully productive in the new role
- Talented staff going to your competitors
Recruiting Costs Other Than Labor
- Cost of posting/promoting the job
- Temp-to-hire fees or temporary replacement fees
- Direct hire placement fees
- Relocation costs
- The increased risk of turnover of new hires (new hires tend to turn over at a higher rate than other staff)
Perceptions + Morale Effects
- Perception that you have a “revolving door” which can be shared on social media, making it harder to hire new staff
- Cost/impact to the staff of having additional work
- Lower morale due to staffing levels and/or loss of a favorite coworker
Impacts to Patients or Customers
- Reputation harm to the company due to perceptions of staff turnover
- Impact to customers due to lost staff (e.g., patient experience, wait times)
Conclusion
Employee turnover has immense costs. Most of them are not calculable and many which are psychological in nature. There are also direct and real costs, as well. All of this creates a real drag on your business that can be accounted for and should be factored into every decision you make.