Most business owners we’ve consulted with appreciate the contribution and commitment made by their employees. But we have to say, we’ve met with others that have a carefree or even cavalier outlook as to whether an employee stays on or leaves their business. Careful examination reveals the real cost of losing an employee. Let’s take a closer look.
One of the first costs of a small business losing an employee shows up as a drop in productivity. All of a sudden, the business isn’t able to produce as much and may even miss crucial deadlines with customers. Many business owners seek to prevent this by assigning overtime to the remaining team members. May I remind you that overtime is considered to be a sin?
Now think about how your team and customers could be affected. A key employee leaving sometimes starts a domino effect. The workplace atmosphere can deteriorate causing other workers to consider a change. We’ve even seen situations where a great employee leaves and causes customer service to suffer. Think about what it would be like for you to lose your favorite bank teller or the restaurant server you always request. You would miss them.
Here are some other things to consider. What is your time worth as the owner of the business? How much time and money will you lose filling the position instead of working in your business? Remember, you are the one responsible for creating the job description, taking applications, initial and follow up interviews, reference checking, employee indoctrination, and providing on the job training. How long will it take the new hire to conquer the learning curve and be productive? Will they make costly mistakes?
What will the newspaper ad, employee testing, medical exams, or moving expenses run?
Many studies have been conducted to try and put a dollar value on what it costs to lose an employee. Some industry experts estimate it costs an average of $3500 to replace even an entry level employee earning $8 per hour. Other studies estimate the loss at one and a half times the annual salary for the employee. So, for a shift supervisor making $50,000 a year, your cost could be $75,000 to find a suitable replacement. Your employees are an investment in the future of your small business.Don’t take it lightly. You have to think like an investor. Know what you need in an employee and where to look. Explain what you expect from them and invest in their training. Empower, reward, and make every effort to retain them.