Employee Turnover

Put quite simply, employee turnover is the term used to describe the rate at which an employer either gains or loses employees.

For a company of any size, keeping precise tabs on the employee turnover rate is of great importance.

In the most simple form, a high employee turnover rate creates inconsistency in the company.

That is, the constant influx of new people into the work environment means that instructions have to be given over and over again while potential projects get placed on hold until the new employees get “caught up.”

While there are certainly many varied reasons that can create unusually high employee turnover rates, some of the most common ones include:

• Wages. If an employee is not making an amount of money that they feel they are worth, it is likely that they will eventually be headed to a new job. Additionally, even if a person is worth the wage they are getting paid, the amount could be so low that they are forced to seek better employment elsewhere for the sake of proper livelihood.
• Company benefits. So, maybe the wages are great. But, in order to compensate for paying well, the company may provide inadequate benefits, especially health insurance. If that were the case, the high salary will not seem as such after medicals bills. It is important as an employer to find the correct balance between that of salary and benefits.
• Job performance. In some cases, the high employee turnover rate may not be the fault of the company at all. That is, the employee may be so incompetent at their job that the company has no choice but to release the employee of their duties. Regardless of the reason, an employee leaving on accord of a company decision is still counted towards employee turnover.

It should be known, however, that companies take employee turnover rates very seriously. The process of searching for, hiring, and training a new employee can quickly turn the ledger sheet red with deficit. In 2006, the Bureau of Labor Statistics estimated that an average employee, from absolute beginning to absolute end, will cost the typical company approximately $15,000. Once you begin to replicate that, the cost of employee turnover can be devastating.
It is in the best interest of the company to avoid high employee turnover rates (which run at a national average of 3.3-percent in the United States). This can be achieved by not only hiring the best people available, but providing them with competitive wages and showing that you care for their well-being by issuing high-quality benefits.