The Cost of Turnover

Turnover Costs You More Than You Imagine

Odds are you’re losing money hand over fist and don’t even notice it because you think it’s just part of the business.

And that’s very unfortunate.

You are literally shelling out hundreds of thousands a dollars a year if you have just 50 employees and a 20% turnover rate.

Would an extra thousand dollars a day in pure profit help your business?

Just in hard costs (advertising, interviewing, hiring, drug screening, pre-employment testing, onboarding, etc…) it costs an employer with 100 blue collar employees earning just $14 at just a 20% attrition rate $93,180 a year.

Bump that 26% and that figure balloons to $121,134.

Should turnover reach 35%, which happens frequently, and the hard cost of turnover skyrockets to $260,904.

And these are just the hard costs associated with $14 per hour employees.

Imagine $20 an hour.

$25… $30 and on.

However, the hard costs are just the beginning.

The soft and hidden costs are far more outrageous.

We’ll cover that in a bit.

According to Gallup, 50% of employees who quit say their management or organization could have done something to prevent it – that is regrettable turnover!

Imagine you have just 48 employees and a 25% turnover rate, that’s 12 employees a year… 6 of which are literally raising their hand saying that you could have done something to keep them.

Not only are you playing the employee merry-go-round, but you’re costing your business a tremendous amount of money – but you’re hurting your existing employees through fatigue, burnout, injuries and increased errors.

The employee merry-go-round is extraordinarily costly.

Now, we’re going to explore the soft and hidden costs.

The real total cost of turnover goes far beyond the “miniscule” hard costs listed above.

The true costs paint a far darker, deeper and far more expensive picture for your business.

As I touched on earlier, approximately 33% of your turnover costs are hard costs.

That’s the easy to figure part.

Now comes the expensive part.

67% (or more) of replacement costs are the soft and hidden costs.

In the soft and hidden costs you have to calculate the knowledge loss, lost contacts, decreased morale, overtime costs, increased burnout and, to top it off, costly mistakes.

On average employees make 118 mistakes a year – new employees make many, many more!

When you retain a good employee your costs are much lower than hiring a new one.

With retaining your good employees your expenses are consistent – and you don’t have knowledge loss, lost contacts, decreased morale, overtime costs, increased burnout and increased mistakes.

All you have to do is keep paying for their wages, benefits, ongoing training, development and, of course, raises!

Contact me today to learn how to greatly increase your retention rate – and cut your costs!