In today’s labor market, increased employee turnover is affecting organizations of every shape and size. There are five basic turnover costs:
1. Replacement costs: These include the costs of recruiting, onboarding, and up-to-speed training for a replacement.
2. Lost ROI on talent development: You lose (often to your competitor) the recruiting, onboarding, and up-to-speed training investment you have made in the departing employee.
3. Disruption in workflow and relationships: There is usually an increased work burden on remaining employees, especially when a good employee leaves suddenly or not on good terms.
4. Diminished morale and copycat departures: Good employees leaving can trigger other unplanned departures. The instability caused by turnover also decreases team morale.
5. Loss of bench strength: The greater your turnover among good employees, the less robust your bench strength of potential homegrown talent for other positions throughout the organization and up the ranks.
To build a winning culture, the solution is not to just cut turnover, but rather to gain control of it. Winning cultures are intentionally built, with a clear mission, reliable communication, strong and supportive leadership, collaborative high-performance teams, real accountability and flexibility, and extra recognition and rewards for high performers.
