Unhappy Employees Can Cost Your Business Big Bucks

It is easy to look at employee turnover as a regular part of doing business. While a certain amount of turnover is inevitable, it is worth doing whatever you can to keep your employees happy, healthy and satisfied in their positions.

According to the US Department of Labor, 20% of workers voluntarily leave their jobs, while another 15% are fired. If you take into consideration how much each one of those separated employees cost their employer, it becomes clear that employee retention should be at the top of your to-do list.

The cost of losing an employee includes many factors, both direct and indirect:

  • Severance pay, payout of vacation time, and other wage-related payments
  • Lost productivity of the employee who is leaving
  • Temporary coverage of the departing employee’s duties, either by hiring temporary employees or paying existing workers overtime  
  • Job advertising and employment agency fees
  • Time spent interviewing and managing the hiring process
  • Training costs – materials, time, and lost productivity for existing employees involved in training
  • More lost productivity while a new employee is learning the job
  • Loss of morale among remaining employees

An analysis done by the Center for American Progress has put actual numbers to these turnover costs. The center analyzed 30 case studies of employment turnover costs from the last 20 years. Costs vary according to the type of position, but overall –

  1. The average cost of replacing an employee is 20% of his or her annual salary. 
  2. A $30,000 or less position costs 16% to replace, with turnover as high as 35%.
  3. Replacing an executive position can cost a more than 200% of the executive’s yearly salary.

Paid time off and sick leave, ongoing career development, and flexible work schedules are all relatively inexpensive ways to improve employee morale and reduce turnover.  According to a survey by Future Workplace, 35% of workers consider flexible schedules as very important, compared to a little over 25% citing competitive wages as the top way to maintain job satisfaction. It doesn’t always take money to make employees happy.

Click here for a Turnover Calculator from Express Employment Professionals that will help you assess just how much employee turnover is costing you.

Carpenter, Evert and Associates offers a variety of HR consulting services specially geared to small businesses and start-ups. Contact us to find out more, or call today at (952) 831-0085.

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