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Staff turnover costs big money for small businesses [infographic]

Posted by TribeHR Staff on Fri, Sep 23, 2011
 

Sometimes you have to reduce expenses by laying-off workers. Replacing them later, though, can be costly for your HR department or small business.

Whether it’s recruiting, onboarding, extra salary, or something else, hiring new staff isn’t cheap. Make sure you understand the entire financial picture before you move forward with staffing changes.

The High Cost of New Hires. What it costs to hire and train a new employee. Adding a worker to the payroll isn’t cheap. ASTD estimates that U.S. organizations spent 125 billion dollars on employee learning and development in 2009. 79 billion, nearly two thirds of the total, was spent on the internal learning function. The remaining 47 billion was allocated to external services. Based on data from the U.S. Bureau of Labor Statistics, the average direct cost for a new employee (not including training) is 58 thousand dollars.. Basic wages forty thousand. Benefits and taxes seventeen thousand. Other expenses two hundred. Time is money. What is “time to fill?” Time to fill is a metric reporting the average amount of time it takes to hire a candidate from the time the Human Resource recruitment staff receives a job requisition order for a specific reporting period. The metric aids HR and hiring managers in 1. determining lead-time on bringing in a new employee. 2. Designating a performance benchmark for HR recruiting departments. 3. helping to increase productivity. Learning hours: The average number of learning hours produced per learning staff decreased from 353 in 2008 to 264 in 2009. The average number of hours used per learning staff decreased from 5507 to 5350. In 2009, 27 7 percent of all formal learning hours made available were online, an increase from 23.1 percent the previous year. The cycle of employee turnover: adding a worker to the payroll isn’t cheap. The average cost to replace an 8-dollar-an-hour employee is about $5500, not including benefits. The average cost to replace an 8-dollar-an-hour employee may be one third to half of their annual salary. Turnover costs include. 1. administrative costs for the leaving employee. 2. operational costs for the leaving employee. 3. recruitment costs for the new hire. 4. training costs for the new hire. 4. lost productivity for the new hire. 6. administrative costs for the new hire. 7. operational costs for the new hire. This infographic brought to you by TribeHR, maker of great human resources software.

 

TribeHR can help your small or medium business save money by reducing your administrative, operational, and recruitment costs. Take a tour of our HR software, subscribe to our HR RSS feed, and follow us on Twitter for great updates and free stuff!


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Comments

IMHO, this infograph appears to support the contention that hiring older workers makes great sense, especially those who have kept current skill sets. Maybe while I'm inferring, I could also see this snapshot as demonstrating the need to dramatically increase telecommuting. Remember 10-15 years ago when (they said)we'd all be working from home? Just some thoughts
Posted @ Friday, September 23, 2011 7:58 AM by John Marus
I wouldn't disagree with you, John. Having a healthy mix of people that includes both those who are highly experienced and those who can bring a fresh new perspective is probably the best approach.
Posted @ Friday, September 23, 2011 8:05 AM by Paul Baribeau
Great infographic! As a small business owner this is pretty well inline with what I've experienced as well. One thing, though: while hiring and training is quite a process, I think the loss of productivity is the main thing that gets small businesses because of all of the stress involved.
Posted @ Friday, September 23, 2011 2:18 PM by Jason | Scheduling
Nice approach! This infographic is great in that you approached it from the high cost of new hires, vs. the most commonly seen "cost of turnover". The focus on L&D is important, as it is immensely critical to retaining great employees. The data is also pretty shocking! I would be very curious to learn what the average tenure is for an $8-hour employee and how that factors into what the average total new hire costs for a company are annually. 
 
Do you think the average number of learning hours online has dramatically increased since 2009 (from 27.7%)? As online training programs continue to gain prominence, it will be interesting to see how the new hire costs change relative to this data as well! 
Posted @ Tuesday, October 11, 2011 3:44 PM by Jessica Ray
If post-secondary education is any indication, the average amount of online learning hours in industry is going to continue increasing for the foreseeable future. It will be interesting to see by how much, once the statistics come out. 
 
Thanks for the love!
Posted @ Wednesday, October 12, 2011 12:17 PM by Paul Baribeau
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