Source | LinkedIn : By Roberta Chinsky Matuson
What would your waistline look like if every time you ordered a meal you added dessert? If you were like most people, it wouldn’t be long before you needed to purchase larger clothes. Eventually you might reach the point where you realized the answer to your tight fitting jeans was in front of you all along.
Like waistlines all across America, employee turnover is expanding at an alarming rate. Yet companies are still following the same regimen, hoping to control their expanding costs. Is your company’s recruitment budget bulging because your turnover costs are out of control? How much are you wasting on satisfying your short-term needs? If you knew you could shave hundreds of thousands of dollars off your recruitment and hiring costs, would you be willing to try a new approach?
The cost of turnover
The time has come to take a closer look at what’s causing the expansion of your recruiting budget. While companies know replacing an employee costs considerable time, energy and lost productivity, few can put a dollar figure on the actual cost. Lack of hard data means investments in retention and recruitment programs get placed on the back burner.
Cost of turnover estimates for a single position range from 30 percent of the yearly salary for hourly employees (Cornell University) to 150 percent, as estimated by the Saratoga Institute. The McQuaig Institute puts this into terms that most of us can relate to. A fast food restaurant must sell 7,613 children’s combo meals at $2.50 each to recoup the cost of losing just one crewmember. To recoup the cost of losing just one sales clerk, a clothing store must sell almost 3,000 pairs of khakis at $35. How many of your products or services must you sell to make up for one employee?
These examples represent the cost of turnover, which encompasses replacement costs, training costs, separation costs and lost productivity. You may be thinking that positions in your company are considerably more sophisticated than those found in fast food restaurants or retail organizations and that it’s impossible to come up with a number. But even an approximate number is better than no number at all.