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The Cost of Turnover


We repeatedly hear the same thing over and over again:


“I love what I do, but dealing with staff drives me crazy.”

Whether we like to admit it or not, the most important aspect of a company is the company.


An organization is nothing more than an intentional alignment of people around a specific purpose. Unfortunately, it is far too easy to lose sight of that fact, and when we do, our company departs. As business owners, we must never lose sight of the fact that we are merely hosting the company.


Every time an employee departs they take a little bit of our company along with them.

Regrettably, we minimize the effect because we have no framework to quantify the cost associated with their departure (Altman, 2017). "Josh Bersin of Deloitte believes the cost of losing an employee can range from tens of thousands to 1.5-2.0x the employee's annual salary. These costs include hiring, onboarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general cultural impacts" (Altman, 2017). The Center for American Progress revealed that 11 research papers written over a 15-year period determined the cost of turnover across jobs of different pay levels averages 21.4% of the employee's annual salary. They went on to say senior executive positions can cost a company up to 213% of the annual remuneration package (Boushey & Glynn, 2012).


Although the quantifying results vary to some degree, one cannot deny that the cost of employee turnover is devastating to the bottom line. This is especially true when we take organizational memory into consideration. Organizational memory is the know-how, procedures, and history of the group. It is arguably the most important ingredient of a company's durability.


Staff turnover walks organizational memory out the door, resulting in a corporate memory loss similar to Alzheimer’s at the company level (Kransdorff, 2003).

What kind of host are we when we create an environment that subjects our company to such a tragic disease?


References

Altman, J. (2017). How much does employee turnover really cost? Retrieved 2018 йил 4-May from Huffington Post: https://www.huffingtonpost.com/entry/how-much-does-employee-turnover-really-cost_us_587fbaf9e4b0474ad4874fb7

Boushey, H., & Glynn, S. J. (2012 йил 16-11). Center for American Progress. Retrieved 2018 йил 4-5 from HuffPost: https://www.americanprogress.org/wp-content/uploads/2012/11/CostofTurnover.pdf

Kransdorff, A. (2003). How to debreif and cut the high cost of staff churn. New Zealand Management , 50 (1), 42-43.


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