There are disparate views on turnover within organizations.   Senior executives secretly relish turnover as it serves to hold the line on salaries, by keeping individuals at the bottom end of the pay scale.   Benefit entitlements accrued based on tenure, are also held at abeyance with turnover.  While holding the line on salary and benefit costs, this myopic view of turnover fails to consider the significant tangible and intangible costs associated with turnover.  Determining the actual costs associated with turnover is difficult. Depending on the industry, the real costs of turnover can vary from a few thousand dollars per employee to several thousand dollars. 

 Recruitment costs -inclusive of advertising, background checks - frequently employer paid, and the significant investment of time associated with  interviewing, selection and negotiating the offer

Orientation and Training costs- may be significant given the nature of the position and the job skills required.   Typically, new employees are less productive, and require close supervision and ongoing feedback, and generally contribute less to the organization.

 Pre-departure costs - let's face it, often times, employees who leave an organization, are disenchanted and may have very well been seeking out other opportunities, using the company's time and resources to do so.

 Termination costs -termination and severance payouts as well as payments for outstanding vacation entitlements, overtime, retirement contributions and extension of benefits during the mandatory notice period can be extremely costly to an organization.

Vacancy costs- The impact on client and customer relations is immeasurable not to mention the potentially adverse impacts on team members.  Costs associated with overtime and the hiring of temporary staff to backfill is important to keep in mind when calculating costs.

When you tally up the cost of turnover considering the above factors, you might just find, that they exceed many times over, your  original estimate.

WHAT CAN WE DO ABOUT TURNOVER?

 We need to understand the factors that contribute to turnover within our own organization.   While there exists reams and reams of literature and research which speak extensively to retention and employee engagement, until we understand the dynamics and unique factors within our own organization which result in disengaged and dissatisfied employees, we will continue to experience the revolving door syndrome.

Employers frequently cite compensation and benefits as the causal factor in turnover, while in actual fact, turnover is rarely for reasons related to pay although obviously, there are exceptions to this.  Dissatisfaction with the employer for a litany of reasons is often at the root of an employee's decision to leave the organization. 

Non-cash strategies which focus on enhancing the quality of work life and the employee experience, are likely to be far more effective as a retention strategy than increasing compensation unless of course, the increase to compensation is fairly significant. 

Quality of work life initiatives such as increased time off, flexible work schedules, and day-care provisions while effective, are not in and of themselves sufficient strategies to address retention issues.   Employees satisfied with the employer's quality of work life initiatives, and who experience alignment between professional, personal and organizational goals, are more likely to hang in with the employer.   The following examples, represent  but a few viable strategies aimed at enhancing employee engagement:

  • Employee recognition programs- based on their unique contributions to the organization

  • Employee involvement - in the design and goal setting of their job

  • Communication - ensuring employees' understand the organization's strategic imperatives and their contribution to organizational success

  • Opportunities for learning - career development, cross- training, acting assignments and mentorship programs

  • Performance measurement - goal setting, measurement, feedback and timely response to performance issues.