Employee turnover costs vary according to how senior or technical a person’s role and their annual salary. The average value can be calculated approximately as 16 percent for high-turnover and low-paying jobs, 20 percent of the yearly salary for midrange positions, and up to 213 percent of the annual wage for a highly educated executive position, or senior specialised IT roles. If a senior developer in London is earning £65,000 a year, the expense of losing them could be £138,450. Can your business afford such astronomical costs going down the drain? IT companies should revamp their hiring methods and provide more care towards employees to avoid losing such significant amounts of money.
There are many factors that a company should consider when they calculate the cost of losing an employee. The salary is a key figure, but other expenses include recruitment costs and onboarding. Employee onboarding is a process where new hires are integrated into a company’s culture. It is essential to provide them with the right tools and information so that they can be productive members of the team. Onboarding is a strategic process that takes a long time and can save a lot of money if it is done correctly. If the onboarding process is not smooth, more expenses can occur, and the employee might not be the right fit after all. They could leave their role within a few months, and recruitment costs will add up again. Recruiters typically charge twenty to thirty percent of the job offer salary to source talent. If the hiring manager wants to undertake the entire process themselves to cut costs, they would have to spend at least fifty hours to conduct interviews and find the best employee. This is valuable time that they could spend doing other work instead of recruitment.
A company must hire the right person. If they recruit someone who is not fit for the position, they could hinder projects that will require additional costs and manpower to complete. Clients will be displeased, and the business would have to fire that employee and start from scratch. That is why companies should spend more time on their job descriptions rather than supplying those that are copied from elsewhere. Companies should communicate the role more effectively and utilize various forms of psychometric testing to discover more about a person’s technical abilities and their personalities.
Many companies offer free healthcare, pension plans, bonuses, and maternity leaves, but they do not focus on employee wellness. People need to feel happy and motivated in the workplace, and that will entice them to stay for several years. Without an employee wellness plan or program, the most efficient workers could feel burned-out and leave for better offers elsewhere. In 2018, nearly half of UK employees changed jobs because they were unhappy. They complained of stagnant wages, poor career progression opportunities, and toxic work environments. Firms need to communicate with employees and find creative ways to motivate them. Hiring the right employees and retaining them is no simple task, but it saves several thousands of pounds a year if they evolve their current management and hiring practices.