High employee turnover is remarkably common in the modern workplace and can affect every industry and sector.
Organizations with high staff turnover rates will suffer from poor perception from their own employees, potential staff, current partners and customers.
Higher than average employee turnover is disastrous for your company’s output productivity and financial performance.
To the uninitiated, a regular influx of fresh bodies and ideas could be beneficial to a company, but in reality, this couldn’t be further from the truth. The cost of employee turnover is extensive, both in the short term and long term, for any organization.
In today’s world of globalized integration and social media visibility, your company’s perception is vital to its success, and high staff turnover will adversely affect your brand positioning for your employees, your partners, and your customers.
It is essential that business leaders, from HR to management, consider high employee retention and the adoption of employee retention strategies to be of the highest priority; especially when you consider the drastic implications of avoiding the issue.
So, why is a high employee turnover rate so costly?
It wastes time.
For most organizations, recruitment is a lengthy procedure that can dominate the schedule of your HR and management teams. This immediately results in a loss of productivity and can take essential team members away from other critical tasks or delay projects. This coupled with the additional training and on-boarding required for new staff members, results in a considerable amount of unnecessary time wasted and, as the saying goes, time is money.
It sends the wrong message.
A successful organization runs most smoothly in an environment of excellence in professionalism, teamwork and work ethic. All three of these invaluable traits become significantly diluted in the face of consistent labor turnover. The values and mission of your company will start to be questioned, not just by your employees, but by the service providers your work with, any potential employees and the clients or customers you rely on for revenue.
The cost of increased employee turnover will also start to affect the budgets you allocate for employee benefits, teambuilding and rewards. A reduction in this part of their remuneration demonstrates a lack of consideration to your employees and will lower their morale, thereby perpetuating your staff turnover issues.
It reduces how smart your company is.
One of the critical benefits of good employee retention is institutional memory. Institutional memory is what you might refer to as ‘on-the-job experience’ or ‘historical knowledge.’ It is the innate and expert understanding long-term employees have of your organization, your brand, and your consumer offering. It is impossible to replace and results in a costly loss when removed as new employees struggle to get up to speed and take longer to find the right solutions to even the simplest of challenges.
It results in poor performance, across the board.
High staff turnover is often evidence of disengaged employees. These are employees who don’t feel happy in their organization, don’t feel valued and feel no particular loyalty to the company. Disengaged employees can be far more damaging than you realize. Recently, the Harvard Business Review recapped research by Queens School of Business and the Gallup Organization that found, “disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time”. If your employees are ‘actively disengaged,’ for instance, they won’t miss an opportunity to put the company down, and the effects can be even more toxic.
It puts your customers off.
Companies with high employee turnover consistently display lower than average customer service and loyalty. This is due to several factors and the way in which you traditional connect with your customer base. On a direct basis, the poor performance of new staff, lack of ability to assist and the perceived lack of stability are immediate red flags to clients and customers alike. Also, this damage to customer perception directly negates any investment you are making in marketing and promotion activities, which causes even more losses for your bottom line.
It costs you money.
As well as the substantial revenue losses your company would incur around productivity, perception, and marketing, there is also a direct cost you can’t afford to ignore. A study by Rutgers University found that the estimated value of losing a single employee can be up to 38% of their annual salary. So if you want to protect your bottom line, you need to protect your employees.
Ultimately, your employees are the backbone of your organization, and it is very much in the interests of your performance and revenue streams, for you to take care of them and strive for the highest possible levels of employee retention. Engaging and ensuring the satisfaction of your employees will pay dividends in overall performance and should, therefore, be the top priority of management and particularly HR. All too often HR Managers, or teams, can get tied up with excessive administrative tasks and find themselves unable to devote enough time to the well-being of their employees. By implementing the use of HR software such as Aqeed People, to assist with their mountain of responsibilities, they could free up more time to focus on the individuals themselves.
If you are concerned about your company, there are key steps you can take to improve your staff turnover and engage your employees more successfully.