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What is the True Cost of Turnover? You Might Be Surprised!

Clint Maun, CSP

There are differing views concerning the actual cost of employee turnover. We feel safe in suggesting that the cost lies somewhere between $2,000 per employee up to $2,500 per employee. This is a conservative estimate. We believe the cost closer approximates the $2500 amount. However, in our consulting proposals and healthcare speaking we use a very conservative number for return on investment purposes concerning an organization’s employee turnover.

The factors we have found that affect the cost of turnover include:
  1. Employee Orientation
  2. Certification
  3. Additional facility specific training
  4. Workers compensation
  5. Unemployment compensation
  6. Interviewing of potential new hires
  7. Advertising costs
  8. Paperwork and personnel file involvement
  9. Problems associated with survey compliance
  10. Customer service/consistency issues
  11. Marketing/census issues
  12. Fines/citations
  13. Morale & motivation issues
  14. Agency or Pool utilization
  15. Communication breakdown
  16. On-going health care delivery errors on a daily basis

As you can imagine, the great majority of costs associated with turnover includes the areas of advertising, orientation, interviewing, training, unemployment compensation, certification and paperwork. However, it is important to note that many of the other “soft” issues that are mentioned in the list above have a direct effect on the facility’s effort to become a provider of choice in their market area. We have found there is a high correlation between the facility’s capability of being an “employer of choice” and their efforts toward becoming the “provider of choice”.

Many of the multi-facility organization’s today start with a turnover cost of somewhere around $2,000 up to nearly $3,000 when they figure their efforts for return on investment. While some of that could be soft dollars, we believe it is important to realize the true effect of high turnover in an organization. If you look at organizations that are considered to be “problem facilities”, you’ll find there is a high likelihood of instability at some level of employment within the organization, if not all levels. Since we are in the “people” business, it is impossible to have product consistency and the resulting return on that investment unless you have employment consistency. These two go hand in hand.

If you’re experiencing high turnover, you may want to consider implementing a team-based Recruitment, Selection, Retention project within your facility. For more information on how to reduce turnover and increase employee retention read Clint’s articles on the topic at (link).