Replacing employees is no easy task. Recruiting and interviewing candidates can be an exhausting job and bringing new hires up to speed can be tricky for everyone involved. Replacing employees can also be an expensive process for most companies. In fact, recent studies into employee turnover revealed that replacing an employee can cost about 20% of that worker’s annual salary.
Breaking Down the Cost
Why is it so expensive to replace an employee? There are a lot of hidden costs when someone is taken off the job, starting with the loss of productivity while waiting for the position to be filled. Factor in the cost of recruiting candidates and the time that hiring managers must dedicate to the process and the damages start to add up. Then, after selecting someone for the position, there is a period of lower productivity during the training and orientation of the new employee.
According to one of the studies, the losses are even higher for executive and senior-level positions that have strict requirements and top salaries. These positions can cost upwards of 200% of the position’s average annual salary. Part of this expense is due to the nature of the position: finding the right candidate takes more time, effort, and resources than for other, easier to place posts. These positions may also come with added expenses such as relocation and travel costs.
Reducing the Impact
Reducing employee turnover is one way to lessen the impact. There are many factors that lead to employee happiness, and most of them relate to company policies and benefits. People are more likely to be happy when they feel they are fairly compensated and when they believe that their values are a good fit for the business. If employee turnover is high, it can be helpful to examine your company’s culture and compensation to see if improvements can be made to increase retention.
The best way to mitigate the costs of replacing employees is to get the right person on the job in the first place. Professional recruiting services can make this process faster and easier for companies because they typically have an existing reserve of candidates ready for interviewing, especially for easier to fill positions with fewer requirements. Plus, recruiting services are skilled at efficiently locating and vetting candidates for positions with greater requirements to take the burden off of the employer and to help them fill vacancies faster.
The Right Fit
When it comes to employee turnover, no company can avoid it altogether. People leave their jobs for a variety of reasons, and sometimes it is due to personal issues, life changes, and other situations that are inevitable. However, by making sure you have the best person for each position the first time around, and working to improve employee relations to boost retention, you can keep the costs of replacing employees in check.