Management Philosophy 101 for dealing with staff turnover: The best way to reduce turnover costs is to reduce turnover.

The real cost of employee turnover is difficult to fully quantify because it is based on many variables but it is  always more than you think it is.

In the restaurant, retail and hospitality industries, turnover is especially high – but, TimeForge, a labor management solution, can improve staff morale and efficiency in order to effectively reduce turnover and improve your bottom line. One way to find the cost of turnover at your business would include the following, some of which  are hard to measure:

  1. Lost productivity – Other staff members will have to pick up the slack of a missing employee, which reduces everyone’s overall productivity.
  2. Temporary cost of replacement (i.e., contractor wages) – Some positions can be filled by others picking up the slack, resulting in no incremental expense. However, if this is a frequent occurrence, morale can suffer — leading to more turnover. Other positions will need to be filled with temporary or contract workers, which results in additional cost.
  3. Recruiting/hiring expense – This is the literal cost of filling the position and can include search fees paid to agencies or headhunters, referral fees paid to employees, ads in newspapers, job board posting fees, etc.
  4. Management time – Time management has to spend going over resumes, scheduling and conducting interviews, evaluating candidates and making job offers. TimeForge can slash the time spent collecting and storing a new hire’s documentation, but interviewing and evaluating applicants is a time-consuming skill that remains unavoidable.
  5. Training costs – This includes all the costs associated with ensuring that new staff members have all the skills and tools they need to do the job.
  6. Learning curve – The time it takes the new employee to perform at an optimal performance level.
  7. Knowledge replacement – This is impossible to measure. Employees leave with accumulated knowledge that is hard to quantify and even harder to replace.

For an even more accurate and comprehensive determination of costs, include the following where appropriate:

  1. Calculate the cost of training your company has invested in the employee leaving. Include internal training, external programs and external academic education. Include licenses or certifications the company has helped the employee obtain to do their job effectively.
  2. Calculate the impact on departmental productivity because the person is leaving. Who will pick up the work, whose work will suffer, what departmental deadlines will not be met or delivered late?
  3. Calculate the cost of department staff and include discussion on their reactions to the vacancy.
  4. Calculate the cost of losing customers that the employee is going to take with them, or the amount it will cost you to retain the customers of the sales person or customer service representative who leaves.
  5. Calculate the cost of drug screens, educational and criminal background checks and other reference checks, especially if these tasks are outsourced. Don’t forget to calculate the number of times these are done per open position, as some companies conduct this process for the final two or three candidates.
  6. Calculate the cost of the various candidate pre-employment tests to help assess a candidate’s skills, abilities, aptitude, attitude, values and behaviors.
  7. Calculate the cost of supervisory time spent in assigning, explaining and reviewing work assignments and output. This represents lost productivity of the supervisor. Consider the amount of time spent at seven hours per week for at least eight weeks.
  8. Calculate the cost of coworkers and supervisory lost productivity due to their time spent on bringing the new employee “up to speed.”
  9. Calculate the cost of mistakes the new employee makes during this elongated indoctrination period.
  10. Calculate the cost of bringing the new person on board, including the cost to put the person on the payroll, establish computer and security passwords and identification cards, business cards, internal and external publicity announcements, telephone hookups, cost of establishing e-mail accounts, costs of establishing credit card accounts, or leasing other equipment such as cell phones, automobiles, pagers.
  11. Calculate the cost of a manager’s time spent developing trust and building confidence in the new employee’s work.

Research continues to show that real turnover costs can run anywhere from 25% to 150% of the position’s salary and benefits, depending on how many of the above costs are applicable to the position.

TimeForge can help reduce your turnover by providing staff and management a superior means of communication, keeping everyone “in the know” at all times. TimeForge reduces turnover by:

  • No more confusion! Keeping employees from being scheduled at times they are unavailable, and communicating schedule and availability changes to staff and management alike.
  • Easy communication! Making online shift swaps, pickups, and time off requests a one-click process (with manager’s approval where necessary, of course)
  • Easily Accessible! Web-based, text message, facebook, and printable schedules, time cards, and upcoming shift reminders.
  • And much, much more!

The number one reason management-level staff members resign is the time, pain and high rate of error that comes with their job including constructing employee schedules – an issue that TimeForge makes obsolete. As opposed to inefficient and cumbersome Excel spreadsheets and paper logs, TimeForge will save management hours and virtually eliminate errors each week in various HR duties, including documentation/certification creation, storage and sending, schedule construction, and all of their various employee management tasks.

Money spent proactively on employee  training, staff morale, career development, staff-management communication and other benefits can have significant return on investment when it leads to reduced turnover, and TimeForge reduces the time and cost associated with accomplishing these vital employee hiring and retention techniques.

TimeForge makes building schedules, tracking attendance, exporting and approving payroll and much more a fast, easy, point-and-click process. With TimeForge, your staff will communicate better, work more efficiently and eliminate costly mistakes associated with human error.

Additionally, our software makes your business more environmentally-friendly by drastically reducing paper usage, which has been shown to elevate staff morale and improve employee retention rate – employees feel good about being associated with a company that’s environmentally-conscientious.

Sign up for a free trial of our labor management software, and start improving your bottom line today.

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