Reducing Employee Turnover Is Just Smart Business

Each time a worker leaves, it can cost an employer $1,000 in recruiting, orientation, and basic training costs to bring in a replacement. Here are tips to help bring those numbers down.

Id 7111 Employee Turnover

CHARLOTTE, NC — Many industries experience heavy employee turnover in good economic times and bad.  In some service industries, it can run anywhere from 75 percent to as much as 400 percent.   

To understand what these percentages actually mean when it comes to dollars and cents, let's suppose a contract cleaner has a staff of 100 employees and a turnover rate of 300 percent annually. That's 300 new workers every year.

Each time a worker leaves, it costs this employer $1,000 in recruiting, orientation, and basic training costs to bring in a replacement. To maintain a staff of 100 workers with a 300 percent turnover means she'll be hiring 300 workers annually, costing a whopping $300,000.

"That's a lot of money that could be used for new equipment, training programs, or added to business profits," says Terry Sambrowski, executive director of the National Service Alliance (NSA), a leading group purchasing organization for larger building service contractors and related businesses in the United States.

Because turnover is so costly and so high in so many industries, Sambrowski offers the following tips on bringing those numbers down:

  • Terry Sambrowski, Executive Director, National Service Alliance
    Hire right. Place a higher value on selecting workers who have a positive attitude over experience or training; the better the attitude, typically the more willing the workers are to learn and stay on the job.
  • Provide exceptional training. Studies have shown that many new workers feel an obligation to companies that have spent time and resources on quality education programs; training can breed loyalty.
  • Offer competitive wages and benefits. Higher wages and benefits often result in staying power for employers.
  • Let employees have a voice. While it is not always feasible, workers should be involved in as many business decisions as possible, especially if it affects their jobs. Encourage workers to share their likes, dislikes, and other input so they feel a part of the business family.
  • Ensure opportunities for advancement. Workers who believe they have opportunities to advance within the company are more likely to stay with the company. Always try to promote from within.
  • Provide recognition. A recent study found that 88 percent of employees reported "praise from managers [is] very or extremely motivating" and more important to them than money.*

"Taking steps to reduce turnover is just good business," adds Sambrowski. "Not only is it a cost savings; happy, long-time staffers become ambassadors for the company and often refer family and friends to the company, which can also help reduce turnover and turnover costs."

*Study conducted by Badgville, an employee motivation firm, released June 13, 2013.

The NSA Advisory is intended to provide general information on issues impacting the professional contract cleaning industry. It is not intended to provide legal or professional advice.

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