The cost of not having employee turnover can be substantial also.
It would've been interesting to see this addressed. In some particularly bad cases, organizations atrophy and lose the ability to respond well.
How much does employee turnover really cost?
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Re: How much does employee turnover really cost?
#22I've never heard of a manager being reprimanded for high turnover. I would guess that this metric has to bubble up to the level of investors' analytics to make a difference in management performance assessment. Perhaps Glassdoor sees a market for such a product. The stakes are high enough that it would move the needle at an organization like YC.
Re: How much does employee turnover really cost?
#23In my business I do try to minimise turnover for almost purely emotional/moral reasons. It's good to have a team that as close to friends as possible. The technical cost of staff turnover is minimal because systems and processes should be designed in a way that anyone can leave without impact to the business for obvious reasons (illness, relocation, family circumstances)
Re: How much does employee turnover really cost?
#24Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was o…
Another important aspect of compensation. When you negotiate compensation with new hire make sure to negotiate the salary you can retain them at not the lowest salary you can get them to leave for.
At my current job I accepted knowing I was going to be leaving at 2 years on the dot. I told the manager hiring me this verbatim. For the first time when I leave a job I will be able to simply say "Well this is what you agreed to when I joined."
Perfect example of cutting of your nose to spite your face IMO.
Re: How much does employee turnover really cost?
#25Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was o…
On 2: Ok all, why do diagonal promotions occur? I understand the issues around promoting when there is no room in the org chart, but I don't understand the issues with pay. Employees will shop the resume around, that is expected these days. And as the article points out, there are massive costs to a firm when those good employees up and leave. So why not just give a raise? Maybe you don't have the budget, I get that, but you certainly aren't going to have the budget when those key employees up and leave either. You will be forced to pay the market rates for good engineers upon hire and then also suffer the downtime and on-boarding time. What am I missing here?
Re: How much does employee turnover really cost?
#26The problem is that these costs don't explicitly show up anywhere or get improperly allocated. It's not like HR comes in and says to someone that has a P/L "we're allocating a whole bunch of expenses to you because of turnover"
Re: How much does employee turnover really cost?
#27Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was o…
It mentions that market rate salaries are table stakes. So view market-rate compensation simply as table stakes, and spend your energy focused on the next level of Maslow’s hierarchy of employee happiness: opportunities for growth, the ability to have impact towards a purpose, and a caring environment that makes them feel valued.
There is market rate and then there is market rate. Have you ever met a manager who didn't claim to pay market rate and pull out the old "salary data" yarn.
Managers seem to think that just because they say something their employees believe it when the reality is the employee doesn't care and will just replace the faulty manager.
Re: How much does employee turnover really cost?
#28Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was o…
It mentions that market rate salaries are table stakes. So view market-rate compensation simply as table stakes, and spend your energy focused on the next level of Maslow’s hierarchy of employee happiness: opportunities for growth, the ability to have impact towards a purpose, and a caring environment that makes them feel valued.
Thanks. I edited my comment accordingly.
Re: How much does employee turnover really cost?
#29This article missed the fact that the cost to the company in trying to keep the employees who will leave every year might be greater than the cost of losing them. For e.g., in the example given in the article, the company loses 1.57 million due to employee turnover. However, who knows how much the company might have to spend to keep those employees from leaving. The cost would be high because the effort spent on employee retention is spread over all employees, even those who won't leave. Hence, even a small expense per employee, might end up costing more than the cost of losing certain percent of them.
Re: How much does employee turnover really cost?
#30Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was o…
I would guess it's common for a team to be in a disfunction environment but stick together for the sake of the team and friendships. Once one person leaves though, everyone then leaves in succession.
I'm in that position now. If a PM who I highly respect leaves I'll probably leave as well because I wouldn't want to deal with the stuff he protects us from. I also wouldn't want to abandon this guy, so I probably won't leave as long as he is here.