Cost of Employee Turnover
Not all turnover can be eliminated but given the high cost of and impact on running a business, a well thought-out, easy to manage program like STAR easily pays for itself in a very short period of time.
"With all things considered, the cost to replace a well-trained employee can easily be calculated at 150% of the employee’s annual compensation figure."
- To put this in perspective, let’s assume the salary of a given employee is $30,000. Taking the cost of turnover at 150%, the cost of turnover is then $45,000 per turnover!
Based on these figures:
- For a small company with 40 employees that has an annual 10% rate of turnover, the annual cost of turnover is $180,000!
- A company with 100 employees that has an annual 10% rate of turnover, the annual cost of turnover is $450,000!
- A company with 1000 employees that has an annual 10% rate of turnover, the annual cost of turnover $4,500,000!
What CEO would not want to add these tremendous numbers to their profit line?
*Source-Cost of Employee Turnover www.isquare.com
The Facts
- The Average turnover rate for all industries is 24%, retail 40%, transportation 17%, manufacturing 13%.*
- Majority of turnover comes from employees with six months or less tenure 42%, 7-12 months 11%, 1-2 years 19%, 3-5 years 10%, 5-10 years 3%.*
- The STAR employee incentive program is the answer! The records prove that when Term of Service awards are included in the STAR Program, turnover rates drop dramatically.
*Source-Thomas Staffing Company
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