Cost of Turnover
It is critical to know exactly what employee turnover is costing your company. On average, every time an entry-level employee leaves, it costs the company more than $2,000. Those costs are a cumulative product of:
- Pre-departure Costs - resulting from a workers reduced productivity and/or disruption in the workplace
- Vacancy Costs - related to overtime or extra shifts required to cover vacant positions, as well as the potential loss of revenue from a shortage of employees
- Hiring Costs - including advertising and agency fees, along with costs of reference checks, testing, and incremental internal administration
- Orientation, Training and Ramp-Up Costs - comprising the costs of formal training, supervision during orientation and ramp-up, and lower initial productivity.
Turnover costs vary between companies, but the total is usually a substantial amount of out-of-pocket costs, even without considering the general disruption created by frequent changes in staffing. You can calculate turnover costs for your specific organization by using the tool at the link below.
Potential Return on Investment
This toolkit is intended to be a first step toward helping employers understand the challenges and needs of their workforce so that they can increase retention of lower wage employees. The business case for policies that retain and motivate lower-wage workers is strong and includes decreases in absenteeism, turnover, and job vacancies, as well as improved capacity, productivity and customer service, greater staffing flexibility, and increased ability to attract qualified applicants. In other words, a workplace environment that helps employees succeed also promotes employee loyalty and engagement, with benefits in terms of cost savings and additional revenue a win-win for both employers and employees.
Read our white paper Unintended Consequences: Changing Workplace Policies to Support Low-Wage Employees to learn more.