When a company’s level of success is measured, one of the things that is definitely taken into high consideration is its employee turnover rate. Although it can’t be helped that there will be times when someone has to be released or leaves to go to another job, when there is a high amount of people who fit into this category, it can send a message that there are some internal challenges within a business that need to be thoroughly addressed.
Aside from the company structure issues that may come with employee turnover, it can also cause a bit of financial stress because there are many costs that incur whenever someone leaves. Here are a list of five main ways that turnover affects a business:
Work doesn’t get done as effectively. When you hire someone to do a certain job and they are no longer present to do it, this means that either someone else has to take up the slack or the work will not be done until another individual can be placed into the position. Either way this slows productivity down and as we all know, “time is money”. The less people there are who can work, the less work that gets done in a timely fashion.
You may have to provide a severance package. Depending on the circumstances surrounding why the employee left, something else that you may have to be prepared for is paying out a severance package. This might also include continuing with any kind of benefits that they may be eligible for during a certain period of time following them leaving the company.
Customer service may suffer. A business that is committed to providing excellent customer care needs everyone in their position, doing their part. When someone leaves, this means that there’s a chance a consumer’s needs may fall through the cracks. Another potential issue that may arise is if the person who left was highly visible or a “favorite” within the company, it can cause customers to not have as much confidence in the business as a whole. If they decide not to spend as much money (or do it as much of the time), that affects the ultimate bottom line.
It requires resources to replace them. Unless you are going to hire in-house or merge two positions into one, when someone leaves that means that you have to spend the time, effort and money to locate a new employee. Whether you do this by putting an ad out on a job search engine or by hiring a recruiter that often requires some kind of fee. Plus, you have to devote an adequate amount of time to interview potential employees and then train the one that you do hire.
You have to take your company’s reputation into account. Reputation.com is a website that devotes itself to helping you to control your online reputation. Unless the person has a high position, if just one person leaves your company, how you are publicly perceived will probably not be placed into jeopardy. But if you lose a few people within a few months’ time, this could be a reason to want to do a bit of “damage control” because the more media attention that you get about the issue, the more questionable your business will become. Therefore, you definitely want to do all that you can to keep your employees satisfied and wanting to work for you. As you can see, when you don’t, it can cost you (In more ways than one).
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