Employee turnover is worth taking note of, particularly due to the cost it imposes on business. Steffen Maier explores the issue.
There is no doubt that high employee turnover hurts a business’s bottom line. Oxford Economics estimates that the average cost to replace a lost employee is £30,000, with £25,000 in lost productivity as new recruits take up to 28 weeks to get up to speed. Figures from a range of sectors including retail, legal, accounting, advertising, IT and technology, suggest the combined cost to UK business over a year could be as much as £4.13bn.
When employees leave, the ripple effect can be felt on the balance sheet, but also throughout the company. As soon as an organisation takes the time to consider high churn rates, it starts to focus its narrative on compensation, benefits, training, development, engagement and morale-boosting activities. This leads to a highly motivated and engaged workforce.
Today, it’s uncommon for an employee to remain at a company for more than five years. A recent US survey by the Bureau of Labor Statistics found that the average time an employee spent at a company in 2014 was three times higher among employees aged 55-64 (average tenure 10 years) than those aged 25-34 (average of only three years).
This is an extract from the Finance & Management Magazine, Issue 247, October 2016.
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