When you hire an employee, you spend a lot of money on interviewing different applicants, finding the right person, and training them for the position. If they end up leaving the job soon after being hired, your company loses money because you have to start the process over again. In addition, a high turnover rate can end up having a negative impact on your productivity and employee morale. By investing in retention strategies, you can reduce your company’s overall costs.
Training Costs Money
It costs an estimated 38 percent of someone’s annual earnings to find a replacement for them and then train said replacement.
The training cost varies based on the employee’s salary, but the average cost per turnover works out to $9,444.47 for someone who earns $8 per hour. For tech companies, replacing an employee can cost up to $125,000.
Obviously, a savvy business owner or manager will try to avoid this cost as much as possible. When you hire a new employee, you are paying them to do no work or very little work for a period of time.
Training is an important and necessary investment, but it’s not something you want to pay for if you don’t have to. By keeping your current employees for longer, you can avoid unnecessary training expenses.
Bad Hires Cost Money
Worse still, bad hires can actually cost your company money. No matter how long you spend interviewing someone and calling their references, you can never know for sure if they are going to be an amazing employee or an unethical one.
An unethical employee doesn’t have to be someone who steals from you or embezzles money. It could merely be an employee who is lazy or who takes extra long breaks. Whether the new hire is criminally or moderately unethical, it still costs your business valuable resources.
When you are constantly hiring new people, the chances of getting a bad egg increases. If your new hire is inefficient, slow, or lazy, they will end up draining your company’s resources. You end up having to pay other workers to stay late in order to make up for the new hire’s poor work ethic.
A bad hiring decision also hurts the morale level in your workplace. If your dependable employees see a new hire who has a terrible work ethic, they will feel disgruntled.
It’s unfair for the new hire and the old employee to do the same job for similar wages when the new hire doesn’t do their share of the work.
If the trusted, reliable employee has to work extra hard to make up the difference, it will only make them feel overwhelmed and unhappy. Before long, you could end up losing more than just one employee.
High Turnover Rates Hurt Morale
If you want to save on costs, you need to invest in employee retention. A high turnover rate will always end up hurting a workplace’s morale. Even if you have the best new hires in the world, your current employees will have to do extra work while the new hires get trained.
In addition, your current employees may have to do the actual training of new employees. This means that your trusted, valuable workforce has to train new hires, do their own work, and do the new hires’ work as well – at least until all the dust has settled.
Even the best employees can only handle this kind of schedule for so long. If your employees are constantly overworked, they will eventually quit and find a job somewhere else.
When you are able to retain your employees, you give everyone a more stable environment to work in. You are able to ensure consistency from your employees and better productivity.
When all of your employees are contributing effectively, everyone is able to get the required work done without feeling overwhelmed.
Experienced Employees Are Valuable
As mentioned above, you never know for sure if your new hire will be a star employee or a lazy worker. If you already have employees who are extremely productive, you should make an effort to keep them as they will provide the best level of consistency and results. This, in turn, benefits the bottom line.
Everyone may have a different way to define employee turnover, but every manager will agree that they want to achieve a low turnover rate. When you have better retention levels, you are able to keep your most experienced employees.
Retention Efforts Inspire Loyalty
By investing in retention, you show your workers that the company genuinely cares about them. When your workers feel valued and cared for, they will want to stay with your company for longer.
They will actually care about the quality of their work because they plan on staying with your company in the long run. Instead of just doing their job well enough, they will strive to go above and beyond your expectations.
Over to You
Finding qualified employees is hard enough. If you are suffering from poor retention levels, your remaining workers will suffer due to larger workloads and weaker morale. By investing in the best retention strategies, you encourage employee loyalty and better productivity.