Many employers think that turnover is a simple matter of replacing an existing employee with a new one. But turnover has multiple costs that eat directly into your profit. Turnover does not just include the wage you are paying, it includes expensive, behind-the-scenes costs that employers seldom consider. Depending on the complexity of the position you are replacing, these costs can skyrocket.
Here is a list of some of the components of employee turnover:
Loss of productivity because the employee has mentally moved on.
Vacation pay payout and other benefit costs. Some benefit plans terminate at the end each month, and if the employee leaves at the beginning of the month, there is a cost attached.
Exit interview. Remember to calculate the cost of time for both the interviewer and the interviewee.
HR time for exit procedures – final cheque, Record of Employment, etc.
Lost productivity in the vacant position, and stress related costs for employees who have to backfill to get the work done.
Overtime costs, or the cost of temporary workers or added shifts.
Update job description and create advertising for a variety of platforms.
Interview costs, including the time of the hiring manager, human resources staff, and any other participant.
Reference checking and meeting time for the team to decide on who to select.
Employee who performs the training.
Loss of productivity of new employee until he/she becomes proficient.
If you calculate the hourly costs of all of these factors in your company, you will quickly see how important it becomes to make good hiring decisions. Even turnover in a minimum wage position is expensive, to say nothing of being time consuming. This is a great reason to work with a professional recruiter who will get it done quickly and thoroughly, and bring qualified candidates to the table that will stand out from the crowd.