As a manager, leader or business owner, you probably already know that a high employee turnover can do your organisation harm. Few people, however, have actually taken a closer look at the numbers to determine exactly how much a high employee turnover costs.
A study suggested that replacing an employee would cost the organisation about 38% of the person’s annual salary. Instead, retaining an employee for three years instead of two can benefit an organisation by as much as 50% of that annual salary over the three-year period.
Here are some of the costs involved in employee turnover:
- Advertising the open position
- Screening and reviewing applicants
- Training the new hire
- Lost productivity
- Errors caused by inexperienced employees
- The cultural impact that can affect other employees
Whether you believe or agree with the numbers, it clearly costs a lot of money to lose an experienced talent. Therefore, it’s very much recommended to deploy employee retention strategies that will help to retain your employees. In return, you’ll save money on recruiting and training, maintain a higher productivity and company culture, and avoid expensive errors.
We’ll share some employee retention strategies next week, but here’s already one big tip: training and engagement incentives can really boost your company culture and your employees’ company appreciation. So when you notice there’s a dip in employees’ morale, do not hesitate to invest in team learning and engagement, as it will cost you a lot less than replacing an employee.
Here’s to organisations that invest in employee retention!
PS: here are some best practices for better staff retention