Turnover is an expensive, disappointing hassle; there are no secret there. Every experienced manager knows that an employee tenure of less than one year translates to high cost and limited returns for the company. If your selection process is flawed, your onboarding strategy is off-putting, or your job descriptions don’t match the reality that your new hires face in the workplace, you’re likely to turn your company into a giant revolving door. If you think you can afford a few reckless mistakes now and then, add up the actual cost and find out for sure. Don’t forget to factor in these considerations.
When you bring on a new employee, that employee probably won’t serve as a financial asset to the company right away. In fact, almost every position in every industry requires a ramp up period, or a period in which the new hire can only be expected to learn, listen, pick up skills and make educational mistakes. This period may last three days or three years, but as long as it’s still underway, the employee’s presence in the workplace can been seen as a liability, not an asset. You invest in your new team member by providing the training, patience, and damage control that new employees almost always need… at least until they learn the ropes. If the employee leaves before the ramp-up period is over, their tenure can be considered a cost, not a source of revenue.
Morale and attitude are contagious. Positive or negative, they spread from one employee to the next. So when one person on your team isn’t happy, others may start to feel the same way (and vice versa). When an employee heads for the door in search of something better, others follow suit. By the same token, a happy and loyal employee lifts morale, which boosts productivity.
When an employee leaves, the replacement process begins, and everyone involved in the sourcing, resume review, interview, and selection process begins shifting their attention toward this project and away from other things. If you add up the hourly salaries of all of the people who contribute to this effort, the price tag starts to rise. Simultaneously, the work they would otherwise be doing must be shifted to someone else or left undone during this time.
After you account for the advertising fees and the general costs of recruiting and screening candidates, you’ll need to factor in transportation to interviews, fees associated with background checks, and fees associated with adding and removing employees from benefit and insurance plans.
When you estimate the total combined cost of each of these elements, you’ll better understand the scope and the stakes of your hiring decision. For more on how to complete this calculation, contact the Charlotte staffing experts at PSU.