Hiring a new employee is far more expensive than keeping a current employee. Seems obvious, but employee replacement has many hidden costs. Some studies (such as Society for Human Resource Management) suggests it costs 6 to 9 months’ salary on average to replace an employee. For the average employee that could be $20,000 to $30,000.
Here are just costs to consider:
- The cost of hiring a new employee including the advertising, interviewing, screening, and hiring.
- Cost of onboarding a new person, including training and management time.
- Lost productivity—it may take a new employee one to two years to reach the productivity of an existing person.
- Lost engagement—other employees who see high turnover tend to disengage and lose productivity.
- Customer service and errors—for example new employees take longer and are often less adept at solving problems.
- Training cost—for example, over two to three years, a business likely invests 10 to 20 percent of an employee’s salary or more in training
- Cultural impact—whenever someone leaves, others take time to ask why
What does it cost to keep existing employees?
When surveyed during exist interviews, the number one reason employees give for leaving is they feel under appreciated.
Implementing a simple (and even inexpensive) employee recognition program can go a long way to satisfying the employee’s need for acknowledgement of their contribution to the company’s success.
Are you properly thanking your employees? Do you have a way of acknowledging the hard work and contributions of those going above and beyond?
Some companies reserve up front parking spaces for exceptional employees.
Some companies have an Employee Wall of Fame.
My personal favorite is employee thank you lunches! But usually the wellness coordinator balks. No matter what you do, helping your employees feel appreciated can save you thousands of dollars.