Three Problems Caused by Employee Turnover and Implications of an Inefficient Hiring Process
- Cost implications. Replacing workers can be expensive. While the cost varies, some studies have shown the cost to replace and hire new staff as high as 60 percent of the old employee’s salary. In addition, total costs of replacement, including training and lost production, can range from 90 percent to 200 percent of an employee’s annual salary.
- Overall business performance. In addition, oftentimes the employees who remain with a company are less productive and less efficient than they would have been in a lower turnover environment. This is because they must absorb the responsibilities of the vacant positions, train new employees upon their arrival, and deal with a depressed work culture and environment. As a result, companies with lower retention rates and high turnover are often less competitive and produce less than companies with a stable workforce.
- Turnover can be difficult to control. And finally, national studies consistently show that employees quit jobs more often because of workplace culture or inter-employee relations than because of the difficulty of the work. A culture of high turnover feeds off of itself, leading to lower and lower retention rates. It can be hard to manage a workforce that is constantly in flux; oftentimes leaving companies in a tough position to compete.