Did you know that replacing an employee can cost 50% to 200% of their annual salary? Recruitment and onboarding are costly and time-consuming. Lost productivity and missed deadlines further increase these expenses. So while often overlooked, addressing the impact of high staff turnover is crucial. This article outlines how to retain top talent and build a more profitable business.
Understanding the Financial Impact of Staff Turnover
At some point, every business must ask themselves, “How much does staff turnover cost us?” The answer can be shocking.
How Much Does Staff Turnover Cost?
For example, a company with 100 employees earning an average salary of $50,000 could incur turnover costs exceeding $2 million annually.
To understand this staggering figure, it is important to realise it’s not solely made up of hiring and training costs. Lost productivity extends beyond the immediate vacancy, as new hires need time to learn the job and get up to speed.
As a result, increased workloads on remaining staff can lead to burnout and decreased morale, potentially fuelling even more resignations. High turnover can also damage your company’s reputation with future clients and prospective talent.
Ultimately, the impact of high staff turnover can create a vicious cycle of declining productivity, decreased morale and financial instability. To understand how your business is placed to overcome these obstacles, the Victorian Government’s staff turnover calculator is a helpful tool.
The Broader Impact of High Staff Turnover
So beyond the financial implications, what are the driving forces behind staff turnover? Team morale is crucial as it directly influences employee happiness and engagement, fostering a sense of connection among colleagues.
Another important consideration is operational inefficiencies, often caused by inadequate resources and processes, creating a frustrating work environment and driving employees to better-run organisations.
But there are solutions. Be on the lookout for early warning signs to avoid letting this situation get out of hand. Monitoring absenteeism and decreased productivity can help you identify individuals who are struggling, the underlying issues and ways to avoid burnout and workplace dissatisfaction before they occur.
The Role of Staff Turnover Data
The secret to reducing employee turnover lies in effectively analysing and interpreting staff turnover data.
How to Collect Information on Staff Turnover
Here are three of the best ways to gather staff turnover data:
- Exit Interviews: By having conversations with departing employees, exit interviews help you gather insights into their reasons for leaving. These can include employee feedback on management, compensation, work-life balance, career growth, and overall job satisfaction. By tracking exit reasons, businesses can identify recurring themes and then address these issues proactively and improve employee retention.
- HR Software: HR software systems track comprehensive employee data, including hiring, onboarding, performance reviews, and departures. This data includes employee demographics, tenure, job titles, performance reviews, salary history, and dates of employment. For example, analysing data on employee tenure can help identify departments or roles with high turnover rates.
- Workforce Analytics Tools: These tools use complex algorithms to analyse staff turnover data from exit interviews, HR software and other databases. The results identify trends, patterns, and key drivers of employee turnover. For example, these tools can uncover correlations between employee engagement scores, compensation levels, and turnover rates, offering valuable insights to optimise retention strategies.
How to Review Data on Staff Turnover
Now you understand what data you need and where to find it, it’s time to learn how to review data on staff turnover. Custom dashboards can visualise trends and segment data by team and role. Look for patterns and anomalies, such as sudden spikes in turnover within specific departments. Identify actionable trends by comparing turnover rates with other KPIs, such as employee engagement scores and productivity levels. Tools like RetainTalent can provide valuable insights by analysing employee data, identifying driving factors of turnover and developing targeted retention strategies.
Leveraging Data to Reduce Staff Turnover
Imagine a call centre experiencing high turnover among its customer service representatives. By analysing data collected through RetainTalent, the company identifies a correlation between low employee engagement scores and high turnover within a specific team. Further investigation reveals a lack of clear career paths and limited opportunities for professional development. Based on these insights, the company implements mentorship programs, training opportunities, and improved communication. These initiatives result in a significant improvement in employee morale, reduced onboarding costs and stronger team dynamics, ultimately leading to a substantial decrease in turnover.
Proactive Retention for a Stronger Bottom Line
When the impact of staff turnover is costing you more than it should, you need RetainTalent. This revolutionary software finally brings a data-driven approach to staff retention, loading relevant HR data from existing systems to identify who is at risk of leaving and their reasons. The result is significant savings by reducing costly staff turnover, improving employee engagement, and boosting overall performance. To learn more about this groundbreaking new tool and how your business can benefit, book a discovery call with our team today.
