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How does high turnover affect a company?
Home » Human Resources » Employee Retention » How does high turnover affect a company?The Employment Policy Foundation in Washington, DC, estimates that the average annual turnover rates for the private sector in 2004 was 25.1 percent. Of course, turnover rates vary greatly depending on the industry. For example, the Employment Policy Foundation found that the entertainment and leisure industry has a 46.4 percent turnover rate; retail industry has a rate of 33.2 percent; and construction, 28.2 percent turnover. Manufacturing and transportation had the lowest rates, at 16.5 percent and 18.2 percent, respectively.
And experts estimate that turnover costs are equal to about 30 percent of an employee’s annual salary. Say you have 20 employees; if even one quarter of those employees left in a given year, and you paid those employees $40,000 each, you’re paying an additional $60,000 that year in employment costs. If that number’s not in your budget, you might be in a rough spot. Wouldn’t it have been better to spend the money on bonuses and bettering your employee work atmosphere to keep those employees instead of spending money to replace them?
And don’t forget the intangible effects of turnover. Anyone who’s been left behind to pick up the slack after a co-worker leaves knows the effect an absence has on a company. You can only pick up the slack and deal with the loss for so long without it having a negative effect on your own morale, energy level, productivity, and so on.
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