Getting Past Myths about Turnover Costs
Turnover costs are inevitably high, and are a necessary cost of doing business
As long as you have employees, you will have turnover - voluntary and involuntary - and turnover does cost money.
Most companies simply have no idea just how much lower they can get their turnover costs. Before HRMetricsPro, it was virtually impossible for a business to accurately calculate what that total cost really was.
In fact, HRMetricsPro is the first tool comprehensive enough to provide objective data about what proportion of turnover costs are necessary and what portion can be eliminated. More importantly, we show you where to make cuts, without reducing the quality of key processes in the Employee Life Cycle, such as hiring, on-boarding, new employee training, and termination.
The U.S. Department of Labor estimates that the base cost of replacing a worker is 30 percent of the employee's annual earnings - and that these costs will go up in the future. We have calculated turnover costs to range anywhere from 25% to 250% of average annual salaries. What level of turnover costs do you want your company to have, 25% or 250%? Where are you now? With HRMetricsPro, you'll know!
Data like this make it crystal clear to senior management how necessary it is to have a full understanding of their company's true total cost of turnover, and discover where those costs could be reduced.
Once you start saving, you'll be able to walk into your CEO's office with a plan for continuous savings.
HRMetricsPro: The tool that provides you with year-after-year employee cost savings.
Our turnover costs are just not that high
Companies often believe they've made good efforts to reduce their turnover costs - they may even have accomplished small dips in their numbers.
Virtually no company can afford to make such a claim. The truth of the matter is that most companies have no idea how much lower their employee turnover costs could be, or how much they can save by reducing them. Hundreds of hours of Retensa research and analysis show that most companies seriously miscalculate their turnover costs. Only HRMetricsPro measures such a wide range of specific factors involved in turnover and tells you which contribute most to those excessive costs.
Our research shows that companies neither account for the wide range of variables involved, nor do they have reliable metrics for taking accurate measures of the factors they do consider. Also, most companies don't ever measure the key indirect costs of turnover, such as lost productivity.
After 2 years and over 4,600 hours of development, HRMetricsPro now measures more than 18 direct and indirect costs of turnover, such as recruiting, new employee training, and lost productivity after an employee leaves - which have rarely been quantified. It also measures 14 staffing and talent metrics, such as cost per hire and recruiting efficiency ratio.
HRMetricsPro takes the guesswork out of analyzing your human capital investment. Know exactly what you are spending, what could be improved, and how much you could be saving - now.
The cost of turnover is really an HR problem, not the company's problem
In fact, turnover is generally managed by HR and involves HR personnel in many respects.
When the cost of turnover is as high as 15%, 25%, or 35% of profits, this in fact impacts the organization as a whole. Why? Because reductions in employee costs go directly to the entire company's bottom line. This means that any department or project in a company could benefit from the availability of those additional "profits" derived from cost savings.
You will be surprised by just how much you can reduce your hiring, staffing, and separation costs. Some companies spend $8,500 or more just to out-process an employee, with little value-add or risk-reduction achieved. The year-after-year savings from using HRMetricsPro will amaze you. You'll be delighted at the extra money you'll have available to put toward revenue-generating projects.
HRMetricsPro: The investment that puts your bottom line in mind.
Turnover is an industry problem
Executives in industries with typically high turnover rates accept it as an industry problem. Granted, some industries, such as retail, traditionally do see a high rate of turnover, with the accompanying high turnover costs.
Even in your industry, some organizations have 40% or 50% lower turnover than average. And many are able to lower their turnover costs by devoting the appropriate attention to measuring costs and making their recruiting, managing, and orientation processes more cost-effective. It's a costly mistake to assume that nothing can be done about reducing costs in industries with high turnover rates.
Only in rare cases do companies benchmark their turnover costs against their industry peers, to determine how high their turnover costs are relative to competitors.
HRMetricsPro provides you with data that can help you benchmark key turnover cost variables against other firms in your industry.
HRMetricsPro: The tool that puts you ahead of your competitors.Schedule A Callback