It is common knowledge that employee turnover costs your business a lot but we
actually do not know how much. While costs like recruiting, hiring and bring them
onboard can be easily calculated, a few other non-tangible costs like employee
engagements or the effect of termination on day-to-day work, are difficult to
measure. These costs can have an impact on your bottom line, irrespective of their
Leading training expert Gaston Dsouza, who as a brilliant entertainer, often doubles
up compering in Mumbai, believes turnover costs are dependent on the following:
The industry you belong to
The importance of the employee’s position
The amount of time it will take to fill the position
However, many such turnover costs can be predicted and measured so that
employee turnover can be budgeted and one can operate with an eye on turnover
costs. Let us now look at the real cost of employee turnover along with methods of
Recruitment & Hiring: The cost for this includes the advertisement costs for
the position, any pre-employment tests and employee background checks you
may wish to run. The operational costs for the time needed to market the
vacancy, verify and screen the applications and applicants, and the time taken
to physically conduct the interviews are the other costs involved.
Onboarding: This important step includes costs associated with training
material, orientation costs and the time needed to conduct on-the-job or
classroom training. The new employee also needs additional supervision
which is a part of onboarding costs too.
Responsibility on other employees: Whenever there is a vacancy, other
employees have to fill in and manage responsibilities along with their own. If
you are a part of the hiring team, your colleagues may have to cover for you
while you are scouting for potential employees. After a new employee is hired,
his training and orientation may need others to pitch in which could lead to overtime or extra work.
Loss of Morale: When employee turnover is high, in all probability, employee
morale takes a beating too. If the employee who has resigned or is
terminated, was popular amongst the others, there could be temporary slack
after the employee leaves.
Job-related errors: When employees are standing in for a former co-worker
or if the new employee is learning on the job, there are possibilities of costly
errors being committed on the job. Unfortunately, these mistakes can have a
bearing on the cost of doing business.
As a training specialist and leading Emcee in India, Gaston Dsouza believes that
productivity will drop whenever a new employee walks in. The productivity gap can
be expensive, at least until the time the new person actually masters his role and
begins contributing in a positive way.