There will always be unexpected challenges that arise in the business world, and CEO’s and business owners should always be prepared for difficult times, but when a high amount of your employees are jumping ship at a pretty consistent basis – that’s something you should get concerned about. While people will typically have different reasons for leaving a company, (many times for external reasons,) the cost of employee turnover has more impact than you would think.
With fewer hands on deck, your productivity is going to drop, and chances are your lost employee was working on more tasks than what was left to the group before departure. Important duties designated to the role now must be performed by other co-workers, stealing time away from their own responsibilities.
Even if the gap of a lost employee is quickly filled by another, the new recruit won’t have the specific job knowledge that was crafted by a certain length of time the former employee probably held. Not everything about a job can be taught in a day, week, month, or even year. It takes time to develop job knowledge including knowing the people, culture, location of info, and detail of work processes. Since this person is being paid at the full rate of pay during this period, there are still more lost productivity costs.
With additional work now divided among staff, increased labor adds to stress which in turn, decreases employee morale. Overworked remaining staff will quickly become dissatisfied and less engaged. If the transitional time stretches for too long without the lost position filled, employees will begin to look for work elsewhere.
Recruitment and Onboarding Cost
While most company positions won’t need a headhunter to find a replacement worker, there are still costs of recruitment that will take place in any interviewing period. Somebody has to take the time out of their work day to focus on finding the best candidate available to fill the open role.
Sometimes there are easy dollars that can be associated with the cost of onboarding like paying for certain seminars or certification courses, but there are other “hidden” costs that aren’t always as apparent. Someone has to be there to train the new hire and walk them through day to day work as questions come up. This takes time away from the trainer’s personal responsibilities and therefore takes away from the company's bottom line as well.
All of these elusive expenses will end up equaling an actual dollar amount. Small Business Chron states that on average it costs $17,000 to replace an employee that is at the median wage in the U.S. If you have an employee that makes more than that and quits, then it’s likely to cost you even more than that. In certain cases it may be better if a struggling or non-engaged worker does terminate employment because their productivity is going to be significantly lower than what is needed for a profitable staff. It is a high turnover that will significantly harm the company and should be managed closely as a red flag indicator that some internal changes need to be implemented.