Employee Turnover – the Hidden Costs

Employee turnover has some obvious ‘above the line’ expenditure associated with it, including recruitment, training, and remuneration costs. However, every time an employee leaves, there are a number of hidden costs you might not have considered and it is usually driven due to a lack of engagement whereby the employee feels unappreciated and/or undervalued for their contribution to the business. While you might not be writing a cheque for these hidden costs, they can have a serious impact on your business.

For example, when an employee leaves, there may not be other employees to pick up the slack. Lost sales, production delays, cancelled marketing campaigns and lags in new product introductions can all cost your company money and competitive edge.

Staff turnover also has an impact on the peer group, as well as the management chain, making everyone less effective. Co-workers may try to pick up the slack, which is likely to distract them from achieving their own performance goals while managers need to devote time to finding a new employee.

When an experienced or knowledgeable employee leaves they take that experience and customer service ability with them which can have an impact on customer confidence and satisfaction. Also, your best staff will often have a great relationship with your clients, so when they leave it may lead the customer to consider whether they should move on too.

And then there’s the issue of credibility. If there’s excessive turnover, existing employees may feel demoralised or disillusioned and decide to move on.

So, here’s what you can do:

Firstly, look for the signs of disengagement. Is the employee taking time off (sick leave, dental appointments, picking the kids up from school etc.), arriving late and leaving early? Is the employee becoming less productive, somewhat vindictive or making comments to colleagues or customers that may be detrimental to the business?

Secondly, consider implementing a holistic wellbeing program to motivate and engage your staff to ‘go that extra mile’.

Stay tuned and we will provide you some meaningful guidelines on what to consider when putting together a program and how it should be implemented.