Try Fixing the Problem Before Replacing It
Your highest-level employees probably earn salaries well into six figures. Triple or even quadruple the tidy sum paid to any one of those executives or specialized employees and you’ll have a rough idea of what it will cost to replace them, according to a white paper from Sage, the software company, which cites research by consultant Ross Blake. He also details some other eye-opening turnover costs, including:
• The Society for Human Resource Management (SHRM) estimates that it costs $3,500 to replace an $8 per hour employee. SHRM’s figures were actually the lowest of 17 nationally respected organizations that calculated such costs.
• Other sources say that it costs between 30% and 50% of a departing worker’s annual salary to replace entry-level employees, 150% to replace middle-level employees, and, as mentioned above, up to 400% for specialized or high-level employees.
Turnover also entails other costs, such as overtime or substitution coverage, onboarding expenses, and dips in productivity as new employees learn the ropes.
As you can see in the chart below, employee turnover is incredibly expensive. Investing in employee retention can provide almost instant payback. Sage calculates that a 2 percent drop in turnover can save a midsize company well into six figures. Achieving best-in-class rates can save millions.
This article was originally published at The Build Network.