High employee turnaround is a huge underlying problem for companies of all sizes. While statistics indicate a cost of $4,000 to $14,000 to replace an hourly employee and up to $45,000 to replace a manager, there are figures that indicate the cost could be as high as $120,000 to replace an employee. Many companies accept employee turnover as a normal condition in the world of business. However, with more effort put on employee retention, companies could save money and increase productivity.
If we assume the average salary for an employee in a particular company is $50,000 per year, the estimated cost of turnover is around 150 percent of their salary. Therefore, the estimated cost to replace this employee is $75,000. A company with 2,000 employees and a 10 percent turnover rate means an annual cost of 15 million. These costs come from training costs for the new employees, productivity losses and new hire costs. And we cannot forget to overlook the cost of reduced morale from workers who have the unpleasant task of having to cover more workload to compensate for those employees who leave. Although these costs are difficult to measure, they are real and they do cost money and cause problems within the company.
There are countless studies that spell out the benefits of employee retention. They all come to the same basic conclusions; employee retention enhances recruitment efforts, increases morale in the workplace and supports an organization’s productivity.
At jobZology®, we offer solutions to high employee turnover rates. We can help you protect and build a healthy culture within your organization. Through employment assessment, we find paths to careers that fit. Happy employees are productive employees that are less likely to leave.