What does losing an employee really cost you?
Right now there is a lot of chatter in the marketplace about how hard it is to find good staff.
There is also a lot of poaching going on - employers are losing good staff to the competition down the road who are prepared to pay more.
We are seeing $5 to $10 an hour more being offered this year for some roles. That is quite a change in 12 months.
But it also raises the age old debate - can a business afford to pay their people more?
Often when considering this very issue an important factor is forgotten (or simply not known) about the true cost of losing staff. It is the cost of lost productivity as a replacement person is found and trained into their new role.
When an employee leaves they usually give you either 2 to 4 weeks notice. Your search for a replacement will easily take all of that time. Then your chosen candidate has to offer their resignation to their current employer and then serve a notice period. By the time they are onboarded and fully trained 10 weeks might have past - if you are lucky.
The true cost of replacing an employee can be calculated like this:
300 x $ Average Hourly Rate = True Cost
So, if the employee you are replacing is earning $25 an hour - the true cost to the business of replacing them is 300 x $25 = $7,500.
That is a lot per employee isn't it?
So, in times like these, maybe a few employee treats are in order?
A weekend away with the family? A $500 supermarket voucher?
Typically, what you pay someone comes about fourth in their reasons to stay in a job.
So,creating a culture of appreciation can be a vital weapon in keeping staff turnover down.
And it is a damn sight less expensive!