By Neal Glatt
As 2020 comes to a close, it’s a great time to reflect on the year and review some key numbers. Many businesses will look at sales, profitability, and even customer service numbers. But very few review one of the most important numbers a business should be managing: turnover. Here is why knowing this number is so critical - and what to do about it.
Turnover is simply the rate at which employees are leaving the company. To calculate turnover, take the average number of employees for the year and divide the number of employees who departed the organization (for any reason) by your average employee count. So, if your average number of employees was 15 and two people left, you would see 2 divided by 15 equals 0.1333, or 13.33% turnover.
This number is so important because it has been estimated that the average cost of an employee leaving the company is between 1.5 and 5 times their annual salary. Add up all the costs of posting jobs, interviewing, training, uniforms, mistakes new employees make, lost knowledge or skills from departed employees, inefficiency from disruption, and perhaps even customer turnover as they follow an employee to a new company. You’ll quickly realize that even a front-line employee who makes $30,000 a year can easily end up costing the business $45,000 or more by leaving.
So how can we reduce turnover? Well, we can start by creating a pathway to help employees stay engaged with our company. Gallup reports that 93% of the time that employees changed roles, they left their employer to do so. This tells us that employers aren’t offering career advancement opportunities nearly enough, as the competition and employees are pursuing their professional growth by leaving companies.
When an employee asks for a promotion or pay raise, companies need to help them achieve their goal by developing them. Too many owners simply deny these requests when they should be providing the training these employees desire to improve their skills and become worthy of that pay increase over time.
If you wasted too much time, money, and effort on turnover in 2020, maybe you need help developing your employees. That’s why we started GrowTheBecnh - to make employee development easy and affordable. If you want to get started, use the promo code TURNOVER for a FREE MONTH of access for 10 of your people to all of our courses when you sign up for our All-Access Pass. When you do, you’ll see higher engagement, more productivity, and lower turnover in 2021.
Tags: turnover , Retention , Employees ,