One of the largest problems modern business deal with is employee turnover. It’s something that can easily affect any business at any time, and it’s considered a very costly problem. It’s often tied to management and how ineffectively the hiring process was conducted. In order to reduce employee turnover it’s important to understand just why it’s so dangerous for the business’ bottom line.
It isn’t cost effective
In most cases of employee turnover the cost is around 40% of the employee’s salary. This means that in order for the investments in the employees to make returns, and to not lose that investment, there have to be standard levels of satisfaction that most of the employees feel. Otherwise, once the employee feels dissatisfied or disrespected, they’ll leave immediately and a new employee will have to take their place. If this happens regularly then it will lead to lower morale and less motivation for the other employees to continue working their positions, and that will increase the risk of them leaving their positions as well. It can be a vicious cycle if not managed properly from the start. You will end up spending about 40% more in training and on-boarding if this is not dealt with.
It leads to poor business performance
Business performance is inherently tied to the motivation of the workers, if there is a high level of employee turnover, then the older employees will have to fill in the vacant positions, as well as train new employees, in addition to already working their own full time position. This can lead to high levels of discontent, apathy, and even active malice in a few cases that can adversely impact the performance of any business struggling with this. When companies have lower employee retention rates that means it’s much more difficult for them to be competitive, and as a result more difficult to stay afloat.
It’s almost impossible to control once it manifests
Studies have shown that most of the workers don’t leave their positions because of the difficulty of their work, but rather because of the company’s culture and the inter-employee relations, which leads to high levels of employee turnover. To understand how to reduce employee turnover and to have higher levels of employee retention, then check this material to learn about most common components of modern employee recognition programs. Introducing employee recognition as part of the workplace environment can do wonders for the morale and motivation of almost every employee, which in turn leads to much better performance and a better bottom line. It’s much more efficient for this to be included as part of the workplace environment even as early as the hiring process, and for it to be present at all time in the company, than to try to manage a high employee turnover rate once it’s already well on the way.
Expenses and costs for the employees that have left the company can sometimes be unmanageably high, so it’s always wiser to have them stay with the company than having to train new employees.