There is an immediate inconvenience for a business whenever an employee leaves the company, whether it is under positive or negative circumstances. However, that inconvenience only deepens once the costs of employee turnovers are revealed to be greater than most people think. Simply put, having a poor employee retention rate can cost exorbitant amounts of money, and can be detrimental to company culture and your customer’s experience. In light of this knowledge, it is quite beneficial for a business to try to prevent employee turnovers whenever they can. Here’s some ways that having a high employee retention rate saves a good deal of money…
Turnovers cost money
When an employee leaves a company, there are several factors that contribute to a big expense. Many analysts estimate that the average cost of an employee turnover equates to about 25% of the average employee salary in that business. This is a lot of money to spend for every employee that leaves, especially since there usually isn’t a net benefit to the situation, as that money is spent just trying to refill the position and manage the duties that are left unfulfilled when that employee left. For spending this money, the company just refills the position and is, hopefully, back where they started when the employee left.
Each employee is an investment
Oftentimes, businesses spend a lot of money to build the industry knowledge and skills of their employees. This training and experience that each employee is getting is an investment for further success within the company. When an employee leaves the company, it means that the company is no longer getting a return on that investment, and must start anew. On top of this, that employee’s skills are likely going to be valuable to a company that offers a similar services. If employee turnovers continue to persist, a business runs the risk of becoming a talent farm for other companies.
The relationship effect
A successful business is bound together by human connections. This involves connections between your employees and your customers, as well as the connections between every person who works at a business. There is a ripple effect on each of these relationships whenever an employee leaves the business. First of all, any relationship that a customer had with that employee will have to be reinstated with someone else. If this doesn’t work, the business is at risk of losing that customer. On top of that, turnovers can be exponential if you are not careful. If an employee who had a positive effect on company culture leaves, it can leave a negative feeling in the air, which can lead to further employee turnovers.