Employee Turnover Cost

Employee Turnover Cost

Employee turnover across all U.S. jobs costs approximately $5 trillion  annually. This cost is avoidable. Leaders and managers know it’s easier and less costly to keep motivation going than to let it die. But whether you are aware of that fact or not, if you are dealing with constant turnover, this book is for you. It will show you how to build an engagement plan that encourages employees at all levels to work together and embrace whatever it takes to get the job done.

Financial impact

Studies predict the cost to replace a salaried employee is around six to nine months of the employee’s salary. For example, for a manager who makes $60,000 a year, the business spends $30,000–$45,000 in recruitment and training costs alone for a new employee. Some studies suggest the cost is even higher, up to double the employee’s annual salary. That’s revenue down the drain—money that could go toward raises, supplies, and/or improving conditions for the residents.

The list of financial costs to replace an employee is long. There is often severance pay, higher unemployment taxes, cost of outsourcing temporary help, insourcing temporary help by paying overtime, advertising, recruitment fees, background checks, drug tests, hiring bonuses, travel, and relocations costs. Supplemental training costs include additional training and development programs, special certifications, on-the-job training, new uniforms, and more. Studies have found the average replacement costs are as follows:

  • A $10 per hour employee—more than $3,000
  • A nurse—$50,000
  • An experienced critical care nurse—$120,000

No business can afford a revolving door of talent, least of all, the health care and senior care industries. Turnover may vary by wage and role of employee, but the evidence clearly demonstrates the costs are just too high to be sustainable.

Motivational costs

The intangible costs of training, retraining, lost productivity, resident care errors, and cultural impacts are difficult to track but are just as critical to the team and the community. When an employee leaves an organization, other employees stop and ask, “Why?” They usually respond by immediately disengaging while they grapple with the loss. During this disengagement, the organization suffers from lost productivity because their attention and focus are diverted. Employees feel unmotivated when they lose a team member. They often experience the loss as sad, unsettling, and disruptive to their own work. The left-behind employees start asking, “Is it time for me to move on, too? I wonder if my coworker’s new community is better? Should I brush up my resume and look around?”

The change is disruptive and disconcerting, even if employees know the circumstances surrounding their co-worker’s departure. The left-behind employees begin to feel anxious about how the absence will affect them. They may also fear management will place more of a burden on them to pick up additional duties and responsibilities until a new person is on board and trained. You want employees to be happily engaged so they won’t look around. Then, you will be able to keep them.