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The Cost of Employee Turnover The Cost of Employee Turnover

June 12th, 2020

You’ve been in the business long enough to have learned a thing or two, and one thing you’ve learned is clear: turnover is an expensive problem. Few hassles and setbacks are more annoying, time-consuming, or disruptive than saying goodbye to new employees within one year of their date of hire. So of course, when you begin your staffing process, you work hard to choose the right candidate because you know the stakes are high.

But do you really know HOW high?

Have you taken out a calculator and carefully added up the cost of employee turnover for each position under your purview, at each level? Knowing the exact cost in both dollars and productivity can further strengthen your motivation to make the right decision. Here are a few things to keep in mind as you run the numbers.

Calculate the cost of the entire interview process.

Of course, you’ll need to factor in the cost of the job post, resume reviews, and transportation for your candidate—including everything from airline flights to validated parking—and you’ll need to account for any lunches you buy or add little details that you invest in the actual interview experience. But you’ll also need to account for your time, and you’ll need to pay for the time your managers and HR reps spend with the candidate as well.

Account for the time the position stands unfilled.

Less critical positions don’t hemorrhage money if they stand unfilled for two weeks, but more critical roles certainly do. And as you add up the cost of each hour and day the role stands empty, make sure you consider the bottlenecks and back-ups that the new hire will have to deal with starting on day one.

Account for the cost of training.

Training and ramp-up periods come with layers and layers of hidden expenses, starting with the actual cost of the trainer’s time, but also includes a host of other direct and indirect factors. For example, the cost of rookie mistakes. This is just one of the liabilities of running a business, but when a new hire learns by making educational errors, she takes those lessons and that education when she goes (typically to work for a competitor). The errors, and their consequences, stay with you.

Account for disruptions in teamwork and the social fabric.

Each time an employee leaves and new person steps on board, the social order reshuffles a bit, and everyone has to spend some time getting to know a new personality. Will everyone on the team get along? Probably yes, but adjustments take time.

For more on how to determine exactly how much an imperfect hiring decision might cost, break down and quantify each stage of the process. Better yet, contact the staffing experts at Merritt and you’ll increase your odds of success.

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