We talk about employee turnover rate every day, but how many of us stop to think about exactly what employee turnover costs?
According to the Society for Human Resource Management (SHRM), employee turnover is incredibly costly. Why? Because replacing employees can take time and money.
Companies must spend countless hours advertising open positions, processing applications, conducting interviews and background checks, assessing candidates' qualifications and experience levels, arranging relocation options if applicable... and the list goes on.
When you add up all of employee turnover cost related expenses over a year period-which SHRM says can include recruiting fees, training new hires, reduced productivity during transition periods, advertising job openings, employee termination costs such as severance packages outplacement assistance, lost opportunity costs associated with recruiting, and more -high employee turnover actually ends up costing the company tens of thousands of dollars.
For example, SHRM cites a 2012 study by Bersin & Associates that found “it cost approximately $6,500 in employee turnover expenses” for an employee earning an average salary of $53,000 per year. When you consider how many other staff turnover costs (and factors) there are surrounding this number-some including other employees and departments within a business who handle tasks that must be repeated by another employee during turnover periods; job listings on job boards that may require multiple postings; etc.-the numbers begin to skyrocket.
The employee turnover rate for 2020, according to SHRM, is projected to land around 19.8%. This means that a little more than one in every five employees will leave their job every year.
This employee turnover rate projection also includes both voluntary turnover and involuntary turnover -meaning those who quit their jobs as well as those who are fired from their positions.
Employee turnover rate also varies depending on which region of the world you're in. According to SHRM's employee turnover rate research, employee turnover rates are lowest in East Asia (16.8%), followed by Europe, Middle East and Africa (EMEA) (17%) and finally North America (18%).
According to SHRM's employee turnover statistics, employee turnover varies depending on the industry you're in. Different industries have different staff turnover rates because employees look for opportunities based on salary and benefits packages that best suit their interests-and some industries pay more than others do.
Employee turnover rate also varies greatly between different types of jobs. For example, according to SHRM, employee turnover for short-term positions averages 16 percent or less per year while employee turnover for long-term positions is higher-averaging 26 percent per year.
The employee turnover rate has been rising over the past 10 years, especially for small businesses. Even as employee retention becomes more and more important for companies that want to keep their workforce growing and thriving, the employee turnover rate for small businesses remains high-more than 60 percent higher than medium and large enterprises (i.e., those with 1,000+ employees).
According to Bersin & Associates, all industries experience employee turnover at an average rate of 16%-with some experiencing employee turnover rates as low as 10% or under and others with employee turnover rates hovering around 25%.
Bersin & Associates' findings indicate that the manufacturing industry experiences the highest employee turnover rate of all business sectors. The retail industry, not surprisingly, experiences employee turnover rates at the lowest end of the spectrum-with employee turnover rates in the manufacturing and transportation sectors following closely behind.
There are a number of ways that private business owners can lower their high turnover rate, with the most effective way being employee retention programs, according to the SHRM.
Employers should create employee retention programs that go beyond competitive salaries and attractive benefits to provide additional opportunities for employee development, personal growth, work-life balance, career advancement opportunities-and much more by emphasizing employee satisfaction. By offering employees a positive company culture with customized training programs that are tailored to their individual needs, businesses can reduce employee attrition and high turnover by empowering their teams with knowledge they can take with them no matter where they go next in their careers.
This sounds like a mouthful you put it all together-but employee retention programs are not difficult to create. All it takes is a little research on other employee retention programs other businesses have put in place-and the ability to think outside of the box when creating your program-to see which strategies work best for you and your employees.
Matter aims to help organizations with building a positive work culture, and can assist with helping your business lower its employee turnover rate by empowering good employees through praise and constructive feedback. If you found any value from reading this article, consider trying out Matter today for free. And for more information on employee turnover, check out our comprehensive employee turnover guide.
