Losing employees is not just a matter of finding a replacement and going through the whole process of briefing and training them again. According to statistics, it costs a company 40% to 50% of an employee’s annual salary to replace entry-level employees and upward of 150% to hire mid-level employees. But when it comes to losing high-level employees, a business can lose up to 400% of their annual salary. If you believe your business needs to cut costs, try to look at your employee retention rate. You may have to do something about it if it’s at the low end of the scale.
Employees want better compensation. They want diverse options such as the Verizon pension benefits. Retired Verizon employees even get discounts for many of the products and services of the company. They can get discounted rates on their monthly plans. It may look little to you, but these are the things that employees value when they decide to stay with a company or not.
Financial Impact
When you lose an employee, you have to advertise, interview, screen, and hire another person to fill that vacated post. It costs considerable time and money to find a new employee. You’ll have to post advertisements on job-hunting sites, as well as on social media such as LinkedIn and even Facebook. You also have to post an ad on your website. Your hiring manager has to monitor emails and responses to these ads. And if you’re seeking high-level positions, it won’t be easy to find people who are tailor-fit to your requirements.
While looking for an employee to fill in the position, you might have to outsource the job to an agency. If you lost an ad executive, for example, you’ll have to outsource his/her work to an ad agency. Or, someone else has to step in temporarily from the ranks. Nevertheless, you’ll need to pay this person for taking on extra duties at work.
Training new employees cost money, too. In 2017, the Association for Talent Development said that the cost of training new hires can cost an average of $1,075. The figure can go higher if the training must be done for highly specialized industries and needs offsite seminars. You should also keep in mind that new employees will not automatically adjust to office policies, rules, tasks, systems, software, and procedures. You have to give them time and, in any business, lost time equals lost opportunities.
Customer Adjustment
If the job vacated has to do something with customer service, you’ll also have to worry about how this will affect your clients. Some of them have grown fond of your customer service representative, for example. Plenty of them might have formed a band with a salesperson. Every time you lose these service-oriented employees, your customers have to adjust to someone new.
It takes time for new employees to be adept at solving your customers’ concerns and problems. While some of your customers may be extra patient with the transition, most of them will not. You could lose customers in the process of training new service-oriented staff.
Effect on Employee Morale
Losing employees is hard for you as the owner, but it’s even harder for those who were left behind. They have to wonder why their co-workers left and how they might have to think about doing the same thing. They have to pick up some of the work left behind. On top of that, they have to deal with someone new in the office again.
It can get tiring for them to befriend a new hire, lose another co-worker, wait for the replacement, help that new hire adjust, etc. They do this every time someone leaves the business. The frustration will build, and it will affect their productivity. When employee morale is low, they perform less than how they’re supposed to. Disengaged workers cost industries hundreds of billions of dollars a year, studies showed.
The Cultural Impact
Of course, it’s hard for your employees to build an engaging and productive office culture when the doors keep on revolving. If people come and go, it’ll be difficult to develop an office culture that people will want to stay in. Friendships will end as soon as another employee resigned. It makes it extra hard for those left behind to pick up where they left off with a new hire. Your employees will be unhappy, which will affect company revenue and growth.
Retaining employees should be one of the goals of a business. They don’t even ask for more than what they deserve. Employees want fair compensation, opportunities to advance their careers, and a conducive work environment. These aren’t too hard to provide if you value your employees.
