A crucial concern for many businesses today is employee turnover. With the continued rise in costs associated with employee turnover, it is critical that businesses take a hard long look at what can be done to minimize it. There is substantial academic and business literature demonstrating the importance of employee satisfaction in building loyalty to an organization and its ability of reducing employee turnover. All companies need to take a deep interest in their employee turnover rate because of the rising cost. When a company has to replace a worker, the company incurs direct and indirect expenses. These expenses include the cost of advertising, headhunting fees, human resource costs, loss of productivity, new hire training, and costumer retention; all of which can add up to anywhere from “50 to 200 percent of a single employee’s annual wages or salary, depending on the industry and the job that is being filled” (Wisegeek). This paper is going to go more in depth with the direct and indirect costs associated with turnover, and how simple solutions and tools can be used to reduce employee turnover.
There are so many costs associated with employee turnover, no wonder employee turnover ranks as high as it does as a leading concern for HR departments and management. There are a wide range of costs associated with employee turnover, but the most significant include the indirect and direct costs of a person leaving, recruitment costs, training costs, lost productivity costs, new hire costs, and lost sales costs. When a person decides to leave or is fired, it puts a huge burden on the existing staff for a number of reasons. The most important reason is that once someone leaves a company a significant amount of time is spent reorganizing, and assigning tasks that need
completion. The time involved, and the loss of productivity by others is extremely detrimental to a company’s ability to stay profitable.
With the labor market tightening on a...