Employee Turnover: What is it really costing you?

“A position here can be open for six months before we find someone to fill the role,” she shared with the group. You could hear the sighs around the room as others nodded their heads and rolled their eyes in exasperation. While facilitating this training on retention with a gathering  of HR professionals, I witnessed group empathy and shared support as everyone acknowledged they experienced this common issue. That was in 2019. Now, in 2021 it’s even harder to find the right talent and turnover is on the rise. 

It’s always been hard to find the right people, add to that what some are calling the “great resignation” and we have a problem to address. What’s noteworthy is that it’s not just affecting big companies. Many small to mid-size organizations are also struggling to find people and keep the talent they have.  

Turnover Is On The Rise Everywhere

Recent reports are showing “the number of job openings in the US is at 9.2 million, nearly matching the number of 9.3 million unemployed. Turnover and wages are accelerating at a rate not seen in the US for over 20 years.” Too many of the leaders I am talking to are spending way too much time hiring the next candidate and crossing their fingers that another employee doesn’t quit. As shared in a recent podcast, “The Brutal War for Talent,” the stress is enough to keep people up at night.

Every “Resignation” Is Costing You Real Dollars

Many nonprofits I know are tightening their belt by cutting costs only to miss dollars that could be saved by retaining the talent they have. I get it, in today’s workplace there is more to be done than you and your teams can do, so it’s easy to let employee retention fall off your radar because you are fixated on getting the work done. Have you ever stopped to wonder how much turnover is costing you? Do you even have a way to calculate your losses? Can you really afford to let this one go? Let’s take a look at a few costs you might be missing in your budgeting:

Time: The biggest ticket item is the time committed when an employee exits (separation costs) and then replacing them with a new employee (replacement costs). It’s admin time, manager time, team time, training time and it’s likely costing you more than you suspect. If you can reduce this time drain, more time can be committed to work that directly impacts the mission and achieves the goals.

Personal Productivity: When any employee leaves there is a loss of productivity as they hand off their tasks. Momentum in completing tasks or moving on to new things slows to the bare minimum as the employee prepares to move on. It can also take a while for a new employee to reach consistent productivity. In the early days, everybody says to the new hire, “Enjoy this moment, because pretty soon you will have more than you know what to do with.” During that period you are paying an employee that isn’t producing at full capacity.

Team Productivity: How much time does a manager spend arranging coverage for the productivity gap? Organizations with high turnover report a “copy-cat” effect exists as others feel a sense of insecurity and look to leave as well. Questions raised by multiple resignations can erode trust in leadership and directly impact team productivity and engagement – even if it is not a direct result of any actions done by the leader. 

If you haven’t ever stepped back to calculate turnover costs … try out this Employee Turnover Calculator to see where you are taking a big hit in dollars because of turnover. 

Losing People Costs You More Than Dollars

Often, you aren’t just losing money, but you are losing history, knowledge, opportunities, relationships  and talent. People are so much more than “workers” and sometimes it’s too easy to miss how much value they bring to the organization and what you lose when they move on:

You might argue that new “blood” brings new ideas. Yes! We need fresh ideas and perspectives, Keep in mind, though, there is a cost -- because doing nothing to keep the talent you already have typically impacts your highest performers first. Who do you risk losing when you do nothing?

"Doing something costs something. Doing nothing costs something. And, quite often, doing nothing costs a lot more!" 

- Ben Feldman

Doing nothing isn’t really an option. We will need to learn from each other as we continue through the impact of the pandemic on our nonprofits, ministries and small businesses. Stay tuned into this blog series for more ideas for your organization to get ahead of the turnover dilemma and keep your people, their knowledge, and their history in the four walls of your organization.  Minimize the drains of employee turnover on your budget  so that you’ll have the needed funds available to fulfill your mission. 

Wondering how much turnover costs you? We can sort it out together in a FREE 30 minute strategy session.