How Employee Turnover Affects Your Bottom Line

How Employee Turnover Affects Your Bottom Line

Although the average cost varies from one source to another, employee turnover costs U.S. businesses $1 trillion a year overall, according to  one study. If you fit the average, you lose about a fourth of your workforce each year, which means you have to replace one-fourth of your employees.

Even if you fall below the average, eventually you'll have to replace an employee. Understanding what that process costs you can help you as you decide whether to invest in reducing turnover via training, improving your culture, and other measures. Here are a few ways employee turnover hits your business's bottom line.

Recruiting and Training

The most obvious way employee turnover hits your budget is through the replacement process itself. You'll have to take time and expend resources recruiting and interviewing  candidates to find the right person for the position. Once hired, you'll the need to put time into training the replacement employee, typically while paying wages to that person.

Loss of Knowledge and Experience

You may not realize until you lose a worker just how valuable their knowledge actually was. When someone puts months and years into doing a particular job, they gain a level of expertise that can't be easily replaced. If you have to onboard someone new, even if they have worked in the field previously, there will be a slowdown as they learn what they need to know to do this job productively.

Lower Overall Morale

It may be indirect, but employee turnover also impacts your budget by lowering morale. In the weeks leading up to resignation, the employee probably wasn't performing at peak productivity. After the exit, coworkers may be distracted or even upset at the loss of someone they liked. Since morale has been linked  to productivity, that means you aren't getting the most out of each worker, which affects your budget.

Brand Damage and Legal Costs

If, for some reason, an employee who leaves is is disgruntled, you could lose money for other reasons. This could be everything from bad-mouthing you around town to leaving a negative review on Glassdoor. If there was some sort of issue that led to the employee separating from you, you could even face a lawsuit, which means costly legal fees and even further reputation damage. Whatever the case, when your reputation suffers, you can lose customers and have a tougher time recruiting employees moving forward.

One way to keep replacement costs low is to work with an experienced hiring specialist. A good recruiter can help you find the right fit for your work culture to increase the chances you'll find someone who sticks around. When you do have to replace someone, they'll use our expertise to reduce the time associated with hiring.

Contact Express Pros today at (615) 441-8898 to find out how we can help you with your hiring needs.