Stay up to date, get our newsletter
In my last video, I briefly mentioned the high cost of turnover, and I got a couple of questions about it. So I thought I would dig in a little bit deeper.
Turnover can be very expensive. Replacing people who leave an organization can cost in net profit, productivity, and trust – both within and outside of the organization. So let’s talk about some of those specific factors.
There are tangible, quantifiable costs. Many of them.
- Unemployment compensation
- advertisements to fill the position
- recruitment fees
- interview travel costs
- job fair costs
- time to interview screen, perform background and reference checks
- pre-employment tests
- signing bonuses
- relocation expenses
- time materials and labor for orientation, onboarding, and training of new staffers
That’s a lot. And that’s not all. There are so many intangible costs around turnover.
- productivity levels, both your existing staff filling that hole and as your new hire comes up to speed
- the loss of intellectual capital or organizational knowledge when someone leaves can be very, for some organizations, almost crippling if they haven’t spread that information throughout
- Team morale, you know, if you’re losing some star performers or you’re losing some key players, that may have an effect.
- Your company’s reputation and customer retention, especially if these are externally facing people. Think about it. If you’re a customer working with a firm and you’re working with one person, and the next month you’re working with another person, and then a few months later, there’s yet another person. At some point, you’re going to think, what the heck is going on with this company.
- Once somebody leaves, that may create a cascading effect where more people leave both because they say this great person is gone, I’m going to, or they may go with them.
- So keep that in mind when looking at your organization’s turnover. We talked about hiring slow and firing fast. But next week, I will dive into some very specific tips to keep your turnover low. This is Judi Otton with GrowthCast, and I’ll be back next week with a new fiscal fitness tip.