The term “turnover cost” refers to the monetary and intangible costs of replacing an employee.
Costs of turnover include things like:
- Unemployment benefits
- Costs of continuing COBRA benefits
- public relations
- pre-employment examinations
- new hire time and materials
- initial training and orientation
Why should you focus on Employee turnover?
- Employee morale suffers as a result of this. As more employees leave, a chain reaction occurs, resulting in decreased productivity and dissatisfaction among current employees.
- When senior personnel retires, the company’s performance is left to the less experienced staff, who have fewer capabilities and knowledge.
- It has an impact on the company’s bottom line. Companies end up losing money that they put into their staff and must reinvest in new hires.
Types of Turnover:
- Involuntary Employee Turnover: When employees are asked to quit the company (involuntarily) because of poor performance, tardiness, or policy violations. Involuntary turnover also includes layoffs, however, the approach is significantly different.
- Voluntary Employee Turnover: When an employee leaves the organization for personal reasons or because they took a job elsewhere. It’s critical for HR to figure out why an employee quits, as this can lead to the discovery of previously unknown issues. Employees typically give verbal or written notice before beginning their leaving procedure.
- Desirable Turnover: When a low-performing employee leaves, the company gains the opportunity to hire someone who can meet the company’s goals. After all, bad performance is costly to the firm, therefore it’s always preferable to replace it with great performance that can aid in its growth.
- Undesirable Turnover:Unwanted turnover occurs when top-performing employees who can help the organization reach new heights begin to leave.
Causes of employee turnover:
- Lack of learning and growth opportunities: Companies should not make learning or training a one-time offer during onboarding. When employees do not find opportunities for career advancement or knowledge advancement within their firm, they hunt for them elsewhere and leave.
- Undefined company culture: It’s critical that your employees feel welcomed at work and that they can connect their selves to their work. That’s where the concept of culture ode comes in. Employees depart for a variety of reasons, including a lack of diversity and inclusion.
- Lack of work-life balance: Aside from being an employee, an employee plays a variety of functions in their lives. It is critical to be able to manage all of the responsibilities that these positions entail. They are more inclined to depart if the job consumes the majority of their time.
- Lack of an efficient recruitment process: When the emphasis is placed on the quantity and speed of the hiring process rather than the quality, high turnover rates are a foregone conclusion.
How to handle high turnover costs?
- Set clear expectations: Your staff may be departing in a hurry because they don’t know what they’re supposed to do. Give them specific instructions on what they should perform and how their participation will benefit the organization.
- Focus on seamless onboarding: Your company’s essential beliefs, goals, and objectives will be revealed during onboarding. It informs employees on what the firm values and how they reward performance. It also discusses what is and is not appropriate at work, so that their employees do not tolerate behaviour that causes them discomfort.
- Show Gratitude: Make it clear to your employees that you value their efforts. Show your gratitude by sending timely promotions, thank you cards, or a simple thank you for an email. This will motivate them and give their labor significance.