As a manager or a business owner, you may already have an idea of how much a staff turnover can add to your company expenses.
Although it is hard to measure all the cost involved in the departure of an employee, specialists can assure you of one thing. It is an expensive process.
According to Industry Analyst Josh Bersin, “many studies show that the total cost of losing an employee can range from tens of thousands of dollars to 1.5-2X annual salary.”
If a talented team member is leaving the organisation, the losses can be even higher.
As stated by the content marketing manager Emily Bonnie, “with high performers delivering approximately 400% more in productivity than the average employee, losing even a few of your star workers can have an astronomical impact on your bottom line.”
Why does it cost so much?
As said by Bersin, employers will not have to spend money on hiring and training a new person only. They may also see productivity numbers going down until the new replacement is ready to deliver the same results as the former employee.
While finding a new team member, the company may have to invest capital in advertisements, interviewing processes, and contracting. At the same time, the organisation has to cover all the expenses regarding the end of an employment agreement.
To PwC, lost in productivity in Australia represents about $3.8 billion, and avoidable recruitment costs go up to $385 million.
It’s not all. Bersin points out other factors to consider when calculating the total price of staff turnovers, such as lost engagement, customer service mistakes, cultural impact, and training costs.
“Over 2 to 3 years you likely invest 10-20% of an employee’s salary or more training, that is gone,” he declared.
Bonnie tries to make it even clearer by using relatable terms. “For a salaried worker earning $60,000 a year, your company will likely spend $45,000 to replace them,” she said.
What to do to retain employees?
Employers should also take into account the fact that many of them will see a team member depart within the next few months.
As reported by Business Insider, “one in seven (15%), or roughly 1.8 million Australian workers based on the number of employed in Australia, are likely to seek a new job this year (2018).”
The article written by Chris Pash talks about a study conducted by Robert Half. The agency heard 460 Australian hiring managers.
The research found that most of the organisations have a set of strategies to keep staff members as long as possible in the company. But, 57% of them believe it won’t stop people from leaving their current job.
By quoting Andrew Brushfield, director of Robert Half Australia, the report suggests businesses should build an employee’s retention plan in conformity to the organisation’s profile.
Bersin says career opportunity, flexibility, work environment, and compensation are relevant aspects to ponder. However, he pays close attention to the job fit criterion.
“Are you attracting the right people for each job? Some jobs are particularly demanding (ie. consulting roles where travel is intense). If you honestly explain these roles and their positives and negatives, you will attract people that fit. If you over-sell the job you’ll suffer a high turnover,” he wrote.
A customized solution
In Australia, companies may have a hard time trying to find the right candidate within the national pool. Sometimes, they are not able to hire a qualified worker locally, which may make it more difficult to replace a former employee.
Lynx People brought a new recruitment solution to help Australian employers, with no placement fee. They have the know-how to place highly-skilled people from overseas in the local Industry.
According to Lynx Team, foreigner candidates usually demonstrate a desire to develop a stable career in a company where they see an opportunity to grow.
Would like to know how Lynx People can help your business to find the perfect fit? Contact Lynx today.