How much is employee turnover costing you?

Has this happened to you yet? Every business must deal with turnover. What most fail to realize is how much this turnover costs.

It is estimated that, depending on the position, losing an employee will cost you 150-250% of that person’s annual salary. Let’s say you have 100 employees and the average salary is $35K. With an average turnover of 10% you’re losing 10 employees per year. Conservatively, that’s an estimated turnover cost of $525,000! What could do with an extra half-million dollars…if you were able to retain your key people instead of losing them?

The example above is a conservative scenario. In fact, when you lose a key team member, your organization will experience some or all of the following pain:

The hard costs of recruiting, hiring and training a new person;

A significant loss of 6-12 months of productivity from the lost position;

Losing organizational knowledge – which can only be replaced over time;

Added stress to remaining staffers who must pick up the slack;

Reductions in morale and overall productivity;

Possible reductions in customer retention (especially if you lose a key revenue producer). A similar vacuum is created if you lose a key technology, research and development team member; and,

Potential loss to your leadership continuum, especially if a key manager or executive chooses to exit.

If you have peak performers and high producers, they are being targeted by your competitors. What are you doing to safeguard these key assets to your success? Especially in this new economy, talent has become a priority. In fact, one trend currently taking place is companies are re-recruiting top achievers they previously lost by offering them more attractive packages. Are your employees next?

Here’s a common scenario…

Five years ago you hired a bright, young, talented college graduate whom you believed had the moxy to someday take your position as leader. Since his hire, he’d become a top producer, had risen within the organization and, literally, was next in line to take your place. You had mentored and nurtured this person for five years.

Then, out of the blue, he comes to you and hands over a letter of resignation. He’s going to work for your competitor.

In that moment all of the time, money, energy and hope you placed into that person is just gone. You feel betrayed, like a trusted friend gut-punched you…and you’re suddenly worried, angry and heartbroken. You wonder what went wrong. Sounds familiar ?