The real cost of employee turnover
Companies today increasingly believe that employees are their most valuable asset. When small businesses consider the costs of losing them, they'll see why this belief is gaining traction.
Now an entire subsection of Human Resources, Compensation and Rewards offers holistic, appealing compensation and benefits packages to attract and retain top talent. While small business owners may question the advantages of generous, competitive policies, especially given their expense during the start-up phase, you need to seriously consider these costs if you lose an employee:
Training and hiring costs
Depending on their role and experience, new hires typically take about three months to fully internalize their training and settle into their job. If an employee's annual salary is $50,000, you spend $12,500 on their training (before tax and other ancillary costs), which doesn't even include the initial hiring costs (e.g., posting the position, interviewing the candidates, negotiating the compensation, and onboarding the hire).
If that employee leaves your company after six months because they've found a better offer, your business will lose that investment, not to mention need to potentially invest it again and again.
Institutional knowledge loss
Longer-term employees develop knowledge and skills specific to their role, your business, and its customers. You can't quantify or train direct experience—so employees with months or years of company familiarity are invaluable. If an employee departs, you'll need to pay at least a year of their salary just to get their replacement up to speed.
Culture and bandwidth issues
When an employee resigns, it oftentimes isn't possible to find, hire, and train a replacement before they depart. In this case, the workload they leave behind falls to the rest of your staff. Unless everybody thoroughly understands everybody else's daily responsibilities, you'll likely see a lot of resulting errors and deficiencies—fostering a stressful environment that may even lead to more attrition. Keeping an employee happy and staying put can keep other employees happy too.
Although you may find it difficult, especially in the start-up phase, to offer competitive compensation and benefits, compare them to the real, hefty costs of turnover. Syzygy can help you find a balance that lets you offer appealing employee packages while maintaining your profitability. Contact us today to learn more.