10 May Why Should All Companies Track Turnover?
The cultural impact of turnover creates a vicious cycle: as employees begin to see an uptick in voluntary separations, they lose motivation and morale drops. Over time, employees may become disgruntled and performance drops below acceptable levels. You may therefore be forced to increase terminations, which only exacerbates the turnover issue. When performance is low and high performers are forced to pick up the slack, turnover may rise, and the cycle continues. Thus, high turnover rates often cause employers to lose high performers, because these employees get noticed and are more likely to get recruited away.
Of course, the effects of turnover are not just cultural. From a financial standpoint, filling the same position over and over is like throwing money out the window.
Beyond the reasons listed above, there additional incentives for tracking turnover. For one, turnover impacts all areas of the business, so addressing it can support better overall growth. When your company retains seasoned, well-trained employees, it is more likely to maintain a competitive edge. For another, tracking turnover rates provides specific metrics for a problem, which can be used to address the issue more effectively and prioritize areas for improvement. Having metrics will also allow you to validate proposed solutions to leadership.
Hard & Soft Costs of Turnover
With such a widespread impact on so many facets of business, calculating the full cost of turnover can be challenging. Nonetheless, by considering a few key factors, you will be able to create a more complete and accurate picture.
The potential soft costs of turnover include decreased employee engagement, lower quality of customer service or higher occurrence of errors, and the negative effect on company culture described above. In terms of hard dollar costs, consider expenses incurred: from recruiting or agency fees, to training new employees, loss of productivity, or possible overtime pay.
Why Should HR Track Turnover?
Rising turnover is not necessarily a result of internal issues. In many cases, it is simply a byproduct of a strong economy. Nonetheless, it must still be addressed internally. While HR does not cause turnover directly, it is often put in charge of handling the issue. By starting a conversation about turnover across the organization, HR professionals can ensure the matter is addressed by the people who can play a role in changing it. Ultimately, HR will likely be seen as part of the solution or part of the problem, so by confronting the challenge proactively, they can be viewed as a strategic business partner.
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