2019 (and the foreseeable future) presents a list of new, complex hiring challenges and costs to employers. But these new issues do little to remove the old, inherent problems. Instead, these contemporary challenges compound the traditional ones, making it more important than ever for businesses to be proactive and take effective action towards combating staffing issues and mitigating costs.
Turnover, for example, continues to be an inevitable component of the workplace. And in some industries, it’s much more common and more difficult to manage.
If your business has an annual turnover rate around 10-15%, then you can consider it to be “healthy”, but historically high turnover industries, like call centers, can easily have rates ranging from 30-45%. Fast food companies can thrive with high turnover rates, priding themselves on optimizing their training systems and processes to quickly make new workers productive (even though they will probably leave within the year).
But for most, turnover is extremely negative for businesses and can carry sizable costs.
How high are these costs?
Well, it depends. There are a variety of factors at play when trying to determine the exact cost of losing an employee—industry, experience level of the worker, productivity losses, training costs (just to name a few) all play their part in the ultimate dollar figure.
Conservative estimates place the cost of turnover per position at 25% of that position’s annual salary. If the average customer service representative at a call center makes $30,000 a year, it costs $7,500 to companies when they quit—per employee that quits. But remember, these are conservative estimates.
Other experts place the cost at 50% of salary at the entry-level, and this number jumps all the way to 125% at the mid-level and to over 200% at the executive level. In high turnover industries, it isn’t uncommon for multiple people to leave in a short period of time, and these expenses can get out of control quickly.
Managing turnover successfully, especially in a time of rising recruiting costs and widespread talent shortages, is imperative for organizations. Below, we list a few proven ways companies can contend with modern turnover.
Successful turnover management starts with successful hiring. To hire the right person, you have to do much more than matching job description bullet points with resume bullet points.
Taking the time to clearly communicate the role and being transparent during the candidate experience is crucial towards your efforts of identifying the ideal fit. It’s far more beneficial to be realistic about a position than to be overly generous to “sell” the role to the candidate. Ultimately, you want to attract the candidate that is willing and ready to deal with the expected stresses of a role, and to do that you need to be transparent about those stresses instead of glossing over them.
Ensuring that a new hire aligns with the company culture is also essential in retaining employees. Use the in-person interview to evaluate how well a candidate will fit with the greater team.
Benefits, benefits, benefits. These days, job seekers are putting a greater emphasis on the benefits and perks that employers offer, especially among younger generations. And with ultra-high competition for a diminishing talent pool, companies that don’t offer the attractive, modern benefits employees are looking for are ruled out quickly.
Gym stipends, work-from-home flexibility, extended maternity/paternity, generous PTO plans, pet insurance, and more are all routine expectations for current job seekers. Take time to review your benefits, compare them to your competitors, and make sure you’re giving yourself the best chance possible to acquire and retain talent.
Regardless of how alluring your company culture is, how enticing your benefits are, or how perfectly you identify ideal candidates, turnover still happens. People get burned out at their current position, move on to new cities or new careers—whatever the reason is, when a valued employee walks out the door, you’d better have a plan in place.
Succession planning can help stop the bleeding from turnover by allowing new leaders to be identified, groomed, and prepared to step into a new position when the previous employee leaves or retires. This not only helps you maintain a pipeline of internal talent to replace the talent you lose but for those identified as candidates for your succession plans, knowing there’s a clear path of progression for their career can help them decide to stick around.
Mitigate Employee Turnover with Bear Staffing
Employee turnover, though, makes up only a portion of the rising costs of modern hiring, and this is just a brief glimpse into the overall climate. Internal hiring, screening and on-boarding, and recruiting costs all compile to surpass even the more pessimistic hiring budget forecasts.
At Bear Staffing, we provide high volume staffing solutions to our clients. You can learn more about our approach to staffing by downloading our latest eBook today.