According to SHRM, every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training expenses. And according to Automotive News, bad hires cost dealerships billions of dollars a year.
So, what is the real cost of turnover and losing an employee? In an article on employee retention by Josh Bersin of Bersin by Deloitte he outlined factors a business should consider in calculating the "real" cost of losing an employee. These factors include:
The cost of hiring a new employee including the advertising, interviewing, screening, and hiring.
Cost of onboarding a new person, including training and management time.
Lost productivity—it may take a new employee one to two years to reach the productivity of an existing person.
Lost engagement—other employees who see high turnover tend to disengage and lose productivity.
Customer service and errors—for example new employees take longer and are often less adept at solving problems.
Training cost—for example, over two to three years, a business likely invests 10 to 20 percent of an employee's salary or more in training
Cultural impact—whenever someone leaves, others take time to ask why.
Here are 3 ways to combat turnover and improve your employee retention rates:
Create a feedback focused environment
Making assumptions about your employees happiness levels at their jobs can lead to a failure to connect and check in. Scheduling and making quarterly check-ins a priority can allow you insight into your employees positive and negative interactions with their daily tasks, clients, fellow employees and their overall job perception. When you have this insight you can proactively make steps to improve their happiness levels and clarify their importance.
Create an Employee Referral Program
These programs give your employees a strong sense of community, inclusion, and they let your staff know their opinion is valued. Finding quality talent quickly and efficiently is top of mind in most, if not all organizations. Referrals can be the driving force behind new, more qualified employee acquisitions and employee retention. According to Recruiting Intelligence, Referrals stay at their jobs more than twice the rate of job board candidates.
Create Attainable Goals and Celebrate them
Recognition in the workplace is crucial to keeping employees motivated and on-board but it is not always clear how employees want that recognition showcased. Each person values different positive reinforcement and understanding your employees’ values can lead to more respect and retention. Some people work best with financial incentives, others work best with vacation day opportunities and some are overjoyed with a simple thank you. Just like how we all have different “love languages” we receive and process recognition differently.
Want to start retaining more employees today with a custom rewards or referral program? Request a Demo.