How to calculate and combat the cost of employee turnover
Read Time: 3 minutes
Do you know the rate of employee turnover at your company?
While the national average sits at an annual 17.8 percent, the rate varies among industries. That much movement adds up on company books. To calculate the cost of turnover to your company, you’ll need to consider many factors, including:
- Time spent filling vacant positions
- Hours of productivity lost prior to vacancy
- Time spent filling positions, including job advertisements, recruiters, background checks, and interviews
- Time that employees spend doing ex-employees’ work until replacements are found
- Hours of orientation and training spent on employees who leave
For example, if you have 1,000 employees and 15 percent turnover each year, you’re responsible for training new employees to fill those open positions. If training each new employee takes two weeks at 40 hours per week, and your new employees make $15 an hour, you can anticipate spending almost $200,000 a year. That cost doesn’t even cover the trainer’s salary, recruiting, or the sunk costs of turnover.
You also sacrifice weeks of productivity. Companies with 1,000 to 10,000 employees require about 26 days, on average, to refill a position. That time increases depending on the role and title of the position you’re filling.
While you can’t eliminate employee turnover completely, you can keep these costs at a minimum if you invest in your training strategy.
- “When employees aren’t offered quality training, 40 percent are liable to leave within their first year of employment.” Onboarding training should include not just company policies, but also company culture. You can set your employees on the right path within the first two weeks of their job.
- Skills and product training is incredibly important for your channel partners, sales, and distribution teams. If they feel like they don’t have access to training, job-aids, and product information when they’re on the job, they’ll become frustrated with their positions and may want to leave.
- Give your new hires an opportunity to understand their roles before they begin. If they’re required to take a course on the products they’ll be selling or handling prior to their start date, you may be able to weed out employees who wouldn’t have thrived in the position.
- Knowledge transfer, succession planning, and career pathing are important to your employees. Have training in place that encourages your employees to succeed, and they won’t be as tempted to leave.
You should also invest in continued training to keep your employees happy. As more millennials join the workforce, their proven interest in continued learning and development will drive their loyalty to your company. A recent Gallup report stated that 87 percent of Millennials rate “professional or career growth and development opportunities” as important to them in a job. Yet only 39 percent “strongly agree that they learned something new in the past 30 days that they can use to do their jobs better.”
Are you ready to invest in your training, rather than invest in filling vacant positions year after year? We’ll consult with you to create a new training strategy that will engage and retain your employees.