Employee turnover has hidden expenses
Q. How do you determine the true cost of employee turnover, and what can be done to minimize it?
A. Costs associated with recruiting include hard costs such as advertisements ($200 to $1,500 for newspaper or online ads), screening tools ($25 to $300 for background, drug tests), and travel costs required to facilitate the recruiting process. Costs not typically calculated include: management time spent reviewing job requirements and descriptions (5 to 20 hours per position); interview time (hourly wage X time spent); and administrative staff time spent coordinating inquiries and scheduling the activities (1 to 3 hours per position). Costs associated with training new hires include cost of material ($50 to $2,500 depending on content); travel costs; salary/benefits paid during training; potential cost of trainer’s time; follow-up/testing competency costs. Other new hire costs include assimilation into the technology systems (passwords, software install/setup) and general payroll/benefits implementation. As the new employee is learning the company policies and practices, etc. they are not fully productive. The new employee can perform at 50% of maximum productivity level for the first 12 weeks; therefore the productivity cost would be 50% of the salary. This shows up in the need for co-worker mentoring and learning processes through experience that requires other staff involvement. How can an HME company reduce associated costs with employee turnover? Studies show that in many cases turnover occurs when the employee doesn’t receive timely feedback about their performance, how they contribute to the organization and how they can improve their performance and contribute at a higher level. Ongoing feedback and coaching are critical to minimizing turnover.