All you need to know about the cost of employee turnover

An employee is the biggest asset for a company; the one factor which drives the business fortunes and molds the brand image of an organization. A right hire has a desirable effect on return on investment which in the long run adds value to the company’s continual ability to innovate. On the other hand, an employee turnover can be quite detrimental to the profit margin, as it eats up a large share of it through cost related to severance settlement, rehiring, onboarding and training.
With so much at stake for an organization, the need to understand and quantify the cost of employee turnover is imperative. Let’s deep dive and evaluate the cost associated with employee turnovers and its impact on the business processes and their overall productivity. The unexpected departure of an employee can lead up to the following cost:

•  Hiring Cost: The cost involved to hire a new replacement includes the cost associated with advertising the roles, hiring a recruitment agency and conducting interviews. Also, the company incurs the cost associated with reference checks or any pre-employment skills test. It’s not uncommon for companies to pay for relocation cost for the right hire.

•  Training cost: Even the most experienced new hire will require training to learn the new processes of the company and their landscape. The training cost will add up until the new employee reaches the same level of expertise as his erstwhile incumbent.

•  The cost of Domino Effect: Factors like poor employee engagement and management along with the expectation of a more challenging work can be reasons for departure. The issue is one departure can have a domino effect and can lead to mass exodus, leaving an irreplaceable void. Keep in mind, the moral cost due to stress, increased workload that will come along with the mass exodus, on the remaining employees will be quite detrimental in the overall scheme of things.

It’s not rocket science to understand that employees are an organization’s biggest asset and losing out on them shakes the foundation of building a competitive brand in the market. The HR retention strategy becomes an important aspect and should entail creating a culture that fosters growth, development, and care.