Turnover costs: what are the impacts of turnover on the company?

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Turnover costs: what are the impacts of turnover on the company?

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Turnover is an indicator that balances the average number of employees entering and leaving a given period. For HR, the warning signal is turned on when there is a disproportion in this number, generating excess turnover costs

The main turnover costs are:

High turnover – or turnover – of professionals in a company is not only concerned with the problems related to the layoffs at a certain time, you know?

For in addition to loss of internal talent and the integration time of new hires, the company is negatively impacted by the turnover cost.

And, believe me: these are figures that come from different directions. They hamper investments in the short and medium term when the turnover rate is neglected by the HR sector.

It is for this reason that, throughout this article, we will present you with the turnover costs and what are the causes involved in the main expenses when the company ignores the monitoring of turnover rates in the company. Good reading!

What is turnover?

In a nutshell, turnover is an indicator that balances the average number of employees who have resigned – or were dismissed – and the number of hires in the same period.

The index is something that is considered natural. After all, there is no organization that can survive without a hiring or dismissal occasionally. What should turn the warning signal on to the HR team is the disproportion in that number.

For industry experts, an ideal turnover revolves around up to 5%. Above that, there is a need to assess the causes of this high turnover and minimize them.

For that reason, we recommend reading this virtual book, which explains EVERYTHING about the turnover index in detail – from its importance to its evaluation and reduction actions. Click here and access now! Is it also possible for you to download and share with your co-workers ????

Turnover impacts on the company

Before exploring the turnover costs, it is important to put in perspective all the impacts related to the high turnover rate of human resources in the company.

One of them is the need to turn to the market, constantly, in search of qualified labor to replace losses. In addition to the time invested in training and integration.

In addition, every professional who leaves a company takes with him the expertise, affinity and technical knowledge in that workflow. Something that a new hire is unlikely to supply in the short term.

So, we can say that the productivity of this team it is also negatively influenced until it picks up pace.

Turnover costs

With a little attention you can see that all the situations explored above cost – directly or indirectly – the company. When many unforeseen layoffs occur, in a short time, this cost is felt in the company’s financial health.

Want to know in what ways? Below are the main turnover costs:

  • expenses with the terminations of each employee dismissed from the company;
  • costs in external recruitment (such as posting ads or hiring headhunters) or internal, in addition to the selection process;
  • investment in training and integration of new hires;
  • low productivity, due to the integration process, which translates into less promising results over a period.

However, in a corporate environment, the loss is not just something monetary. Indirectly, turnover costs are measurable over time as well.

Think, for example, how much the HR sector will invest in the selection, training, integration, feedbacks and calculations with terminations style=”font-weight: 400;”>?

When the turnover rate is above acceptable, many professionals are dedicating themselves to a task that, in addition to being costly, can be considered unnecessary.

And this is where the relevant action of HR professionals in recognizing the problem or the situations that are moving the entrances and exits in the company, to solve them comes in.

Control of turnover in companies

A number of factors can cause the turnover index to go up, such as:

Among other situations that can be configured in the company’s motivation to fire one or more employees, or in their desire to seek new opportunities.

The question is: How can HR play an important role in reducing turnover?

>> The first step is to always have your company’s turnover rate and analysis at hand. For this, we provide a turnover calculation spreadsheet. Just you answer this form and you will have access right now!

Improvements in the hiring process

The first step is to identify the company’s entire admission process. When well-structured, it is aligned with the profile required to fill each vacancy.

Otherwise, hires become bets, not investments. Some alternatives to qualify this activity:

Inspire and motivate teams

Motivational actions are good solutions to reduce turnover costs in the company. Not to mention the presence of leaders who engage, involve and inspire their employees.

This is important to avoid collective dissatisfaction, which generates excessive – and unnecessary – costs for the organization.

In turn, these actions translate into better results. It is a consensus that a motivated team produces more and better.

Conduct dismissal interviews

Does the turnover index happen more by decision of the employees? So, through termination interviews it is possible to identify the causes for this.

Consequently, the company’s HR is equipped with relevant information to assess the high turnover rate. Something that makes all the difference to reduce it.

And remember that turnover, in itself, is not a shadow that hangs over companies. Reducing it to zero is impossible and not recommendable at all. After all, renewal is more than welcome, often to give the company a boost – and also to the professionals.

Therefore, pay attention only so that turnover costs do not become a rule, in the monthly budget, instead of being the acceptable exception in a corporate routine.

Now, to learn more about other issues relevant to your day-to-day HR, subscribe to our newsletter (by filling in your email address in the lower right corner of the our blog) to receive all our news at first hand!

Meet HR Consultants UK, a Human Resources platform that can greatly help people and performance management of your company.

With our system you will:

  • reduce the time in your employee dismissal admission processes;
  • have a clearer and safer process;
  • avoid penalties, fines or any risk related to legal issues and information management of the company.

THE HR Consultants UK it is the only one that delivers an incredible experience and still solves the real problem that the customer has. Talk to an expert and find out how to reduce your HR costs by 30%.

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