In business, the days of valuing loyalty appear to be largely over. In today’s job markets, employees are positively encouraged to change companies every few years or face charges of “lacking ambition.”
It appears the markets are also designed to punish the loyal financially. According to Forbes, the average annual raise that an employee who stays with a company can expect is just a few percent. However, an employee who change jobs typically attracts a bump in salary of 10 to 20%. This means that employees have a financial incentive not to hang around.
Many companies just accept that this is how things are. However, it’s extremely common to underestimate what employee turnover is really costing.
The costs of employee turnover
When an employee leaves, costs include those associated with advertising for a replacement, conducting interviews and training the new employee. They also include the time it takes experienced personnel to complete the recruitment and training processes, and productivity that’s lost as a result of the delay before a new employee is in place and up to speed.
An article in the Wall Street Journal notes that “experts estimate it costs upwards of twice an employee’s salary to find and train a replacement.”
A further cost that many fail to consider is that of physically catering for frequent changes in staff.
In large companies, managing churn can involve regularly dismantling, storing, moving and reassembling office furniture, workstations and partitions; moving personal effects; and changing security codes, tags and keys. This can be disruptive and costly, especially over the long term.
Strategies for reducing the cost of employee turnover
Commonly accepted methods for reducing the costs of turnover relate largely to encouraging existing employees to stay. They include strategies such as:
- hiring the right people in the first place, which may be the most crucial step
- offering competitive remuneration packages and attractive perks, and reviewing these at agreed intervals
- acknowledging employees’ progress and achievements
- working with employees to plan rewarding career paths for them, within the company
- offering flexible work arrangements, such as flexi-time or telecommuting
- when employees do leave, conducting exit interviews to find out why and then addressing those issues for remaining employees.
These are all valuable strategies, not just for keeping employees but for ensuring that while they’re with a company, they “put their hearts” into it, working productively and prioritising the company’s interests. Loyalty isn’t only about staying put for the long term.
However, the reality is that employee turnover is a fact of doing business. Especially in medium to large companies, employees leave for all kinds of reasons – and these include incentives that are intrinsic to modern job markets.
Outsourcing churn management
Given the inevitability of employee turnover, larger businesses can significantly reduce costs by outsourcing churn management to a suitably experienced third party. This can minimise office disruptions, lost time and productivity, as well as improving office security.
At K-Mark, we have over a decade of experience in managing churn on behalf of leading South African corporations. We supply, install, repair and relocate office furniture as required, handle the security aspects of terminations and can provide on-site assistance at very short notice.
This means that instead of spending time setting up office spaces, hauling furniture around or troubleshooting problems, employees can get on with the jobs they’re trained to do.
