Top 5 Tips to Reduce the Costs from Employee Turnover
A high employee turnover hurts a company financially really bad. Experts believe it costs more than twice an employee’s salary to find and train a replacement. And most of the time this also damage morale among the remaining employees.
Employee retention is a very important factor when it comes to the long-term success of your organization.
If an employee leaves your company the costs can be between 50-150% of their salary. And this excludes the high costs and toll that it takes upon employee morale, which most of the time results in distraction, productivity loss, and further turnover.
Although, corporate wellness programs have been proven to help to lower employee turnover and improve employee retention rates, and also increase productivity by bringing a healthier and happier working environment. But what is more important is that the overall costs of implementing corporate wellness programs are low as compared to the costs combined with high employee turnover.
Costs Associated With Employee Turnover
You will feel it very badly on your overall employement expense when you replace employees. Look at this example: Suppose your organization at present employs 40 staff, each earning $25,000 a year with a turnover rate of 25%. The cost for your organization to replace 10 employees during that year will be at least $125,000. That is a substantial amount which could be put to better use by the organization.
Let us take a closer look at the overall costs associated with employee turnover and replacement:
Separation Costs: These costs will include
- Costs associated with exit interviews.
- Administrative costs for functions related to employee termination.
- Severance or separation pay.
- Costs associated with unemployment compensation.
Vacancy Costs: These costs indicate to those associated with temporary employees or increased overtime needed to manage the tasks of vacant positions of the resigned employee.
Replacement Costs: These costs will include the costs associated with
- Attracting new applicants.
- Entrance interviews.
- Travel expenses
- Pre-employment administrative costs
- Medical exams
- Training costs
Corporate wellness programs tackle this problem by trying to reduce costs and improving employee retention rates.
Top 5 Tips to Boost Employee Retention Through Corporate Wellness Programs
We have listed 5 tips on how organizations can use corporate wellness programs to keep their good employees, improve their employee retention rates, and lower the costs associated with employee turnover.
- Interview candidates carefully: Not just to ensure they have the right skills but also that they fit well with the company culture, managers and co-workers.
- Creativity: When necessary with benefits, flexible work schedules and bonus structures.
- Recognition and praise: These are a cost-effective way to keep a happy, productive work force. While increasing employee salary is often hard to achieve, extra’s like employee wellness programs can be an effective supplement. Such programs show that you care for your employees. This helps to keep good employees who are also driven by quality of life.
- Improve work place morale: From exercise and fitness programs to nutritional advice, corporate wellness programs offers health benefits to employees and improves staff bonding, so improves morale at the work place. Exercising also releases endorphins, which improves their mood.
- Improve communication: In today’s fast paced hectic life, employees barely get a chance to connect with one another. Participating in employee wellness programs allow staff to form relationships and allows better communication.