Statistics show that employees change jobs at least 12 times in their working years. That’s more than the number of times they relocate. For any company, that doesn’t bode well. Each employee who leaves costs your business a lot.
How Much Will Employee Turnover Cost You?
No single answer can satisfy the question. In fact, you’ll come across different figures. One thing is clear: it is expensive. A Deloitte research once points out that it could cost up to twice the annual salary of the employee.
A case study by People at Greenhouse, meanwhile, revealed that keeping a salesperson for three years instead of two can give the business a net value of over $1.2 million.
In 2017, a report suggested that turnover costs were about 33% of the yearly wage. At the least, it could be 20% of the employee’s first-year income. The process of hiring and onboarding an applicant equals spending. When you lose an employee, you need to pay for advertising.
You can hire internally, but you might need to train the person for the job. That’s extra costs for you. The problem worsens once you account for the lost productivity and efficiency. You lose money for every day you fail to hire someone to do the job.
It might even be pricier for you in terms of labor costs. Take, for example, a senior employee who handles three critical tasks. If this person leaves, you might end up hiring two or more people to fill in the role.
How to Keep Your Employees in the Business
If you want to save business costs, don’t just hire new talent. Keep the old ones. These individuals already know your company’s ins and outs. They have a better idea of what your business needs and how to reach your goals. Most of all, they are already experts in what they do.
To keep them, you need to understand what forces them to leave in the first place. This is where employee incentives come in. In a study by Gallup, the reasons for quitting can fall into any of the six categories. The first on the list is career advancement.
About 32% of the surveyed people said they left because the company failed to provide growth. However, 22% opted for greener pastures due to a lack of pay or poor benefits.
It doesn’t mean that you need to offer as many benefits as you can. In the survey, employees simply wanted to feel properly compensated. It implies it’s not the quantity but the quality of the benefits you’re providing.
Coming up with the right combination of pay and incentives is easier said than done. After all, you still need to consider the costs. These benefits should also be sustainable.
Companies these days can work with teams that can help them craft an appealing list of incentives. These will consider your budget and business goals. Just like it’s expensive to get a new lead than retain a customer, it’s costly to lose an employee. Encourage them to stay by knowing what they want-and need.