There are a number of factors that contribute to the cost of replacing an employee. Here are just a few:
- Overtime – for other employees and temporary staffing
- Advertising – search agency fees
- Time – sifting through resumes, interviewing, making contacts, arranging meetings, coordinating schedules
- Evaluation – background checks and testing, certifications
- Training – lost production
It adds up quickly when you consider all of the direct and indirect costs. Studies on how much it costs to replace an employee range anywhere from 15% for lower paid positions to 50% for higher paid positions. For an annual salary of $35,000 and assuming a 15% cost that adds up to $5,250.
So why do employees leave and what can be done to prevent unnecessary turnover? Perhaps you’ve seen studies showing top reasons such as: poor relationships with supervisors, boredom, and lack of opportunity for advancement. Another major factor is a lack of understanding of employee benefits and wages and therefore a lack of appreciation. Employees simply do not recognize the value of their overall compensation, so communication is key.
Employee Benefit Statements (Total Rewards Statements, Total Compensation Statements) are a great way to communicate value. In a very brief format you have the opportunity to say thank you to your employees and share the value of your medical, dental, retirement, and other benefit plans. It’s also an opportunity to stress your mission, values, and vision or other important employment benefits. Using eye catching visuals, pictures, and graphs can make the communication more enjoyable to read and make a greater impact on employee tenure. And the best part – it’s inexpensive. For literally “pennies on the dollar” you can have a significant influence on employee turnover.