THE TOTAL COST OF TURNOVER
October 17, 2011
Entrepreneur magazine http://www.entrepreneur.com/article/220254 ran an interesting story recently about the full cost of employee turnover. In the on-line version of the publication, a special article talked about how turnover impacts productivity, customer satisfaction, co-workers and even company credibility.
The bottom line is that turnover costs a company in countless ways. That’s a finding that the Coca‑Cola Retailing Research Council agrees with fully thanks to a perpetually relevant study called New Ideas for Retaining Store Level Employees http://ow.ly/6uot4 .
The study, conducted in 2000 by the Universityof Dallas, included an exhaustive study of more than 100,000 employees and detailed the larger cost of turnover caused by many of the same problems cited in the Entrepreneur article. For example: the direct cost of losing a cashier is under $600 for recruitment, new training and other basic issues. But the opportunity cost of losing an experienced employee and the impact on shoppers and co-workers is more than six times larger—around $3,700. For department managers, the total cost of turnover is nearly $10,000 for a single person.
To address this critical problem, the study urges management to focus on improving retention and examines some of the root causes of employee dissatisfaction that lead them to leave. Hourly employees look for clear direction provided by well-trained managers, along with ample supplies of the equipment they need to perform their jobs correctly. Management employees seek strong organizational direction, training and the potential for advancement.
As the article in Entrepreneur reminds us, none of this is cheap. But it’s far cheaper than the cost of replacing good employees and repairing all the damage they do by walking out the door. New Ideas for Retaining Store Level Employees will give you ample ideas on how to address this problem quickly and better than ever.
Coca‑Cola Retailing Research Council of North America