Understanding the Bottom Line
It’s expensive to replace an employee. The Society for Human Resource Management (SHRM) estimates the average cost-per-hire at $4,129.1 From advertising job vacancies to researching candidates to coordinating interviews, the turnover process can strain any company’s resources. The value of retention efforts is never clearer than when you look at what poor retention will cost you.
Replacing an employee begins the day they give notice. Duties must be delegated to other team members, administrative work must be completed, and so on. Depending on the employee, it could take days or weeks to adapt.
Beyond lost time, turnover decreases morale. Losing a coworker can be tough on the remaining staff. There are questions about why the person is leaving and whether they found a better opportunity. It isn’t uncommon for one exit to inspire other employees to start their own job hunts.
While your company may no longer be paying a salary, there are costs to unfilled positions. Other employees need to cover the abandoned duties, which may result in overtime and decreased productivity.
Filling that vacancy will bring additional costs for writing, advertising, and posting listings on job boards and with recruiters. Those costs multiply if the position requires highly technical skills or experience that can only be developed in-house.
There is an unavoidable ripple effect that comes with losing an employee.
Vetting, Hiring, and Training
SHRM estimates an average of 42 days to bring on a new employee. That allows for time to decide on the candidate profile, hold interviews, check references, administer drug tests, and allow the new hire to provide notice to their old job. There may be even more work involved to set up security clearance and issue equipment depending on the position.
Even after your new employee has accepted your offer, you will be investing more time and money for training and orientation. It can take weeks, or months, before they add real value.
The best way to save money is to minimize employee turnover proactively.
Focus on Employee Retention
Average employee tenure is about eight years.2 The days of employees staying at the same job their whole lives are likely gone for good, but your people are more likely to stick with you if they feel valued and appreciated. Show appreciation by offering benefits that fit their needs.
College-educated workers are carrying student loan debt later in life, many up until retirement. People stifled by student loan payments are less likely to take advantage of things like retirement benefits as they deal with the more immediate need. Contributing to a solution to that problem is an excellent way to show you are invested in the needs of your employees.
Start by evaluating your current benefits. Think about valuable employees who have left and what could have been done to retain them. Adding perks that match with your employees’ pressures will keep them invested in your company. To learn how IonTuition can help provide benefits to your company, request a demo today!
1 Society for Human Resource Management “Average Cost-per-Hire for Companies Is $4,129, SHRM Survey Finds” https://www.shrm.org/about-shrm/press-room/press-releases/pages/human-capital-benchmarking-report.aspx 2 Economic News Release “Employee Tenure Summary” https://www.bls.gov/news.release/tenure.nr0.htm