The cost of high employee turnover and how HRMS reduces it

Employee turnover is known to be a high cost regardless of your industry or geographic location. Turnover is often estimated as a percentage of an employee’s salary. There are a range of estimates in this area but they have gone as high as 213% of an employee’s salary.

The turnover of lesser-paid employees is a lower cost to a company but can start to add up when volume is plentiful. Why is employee turnover such a high cost to a company and how can an HRMS help to reduce it? Here are key areas to explore as you measure your company’s turnover.

Cost of onboarding and training

Onboarding and training costs should not be taken lightly. A mid-level professional may take six months to a year to become fully operational. Entry level staff require supervision and training to learn processes.

Get more insights into your employee data with this guide to getting the most out of your HR data

A way to reduce onboarding and training costs is to ensure that your employees have a strong career plan in your HRMS. While training for existing employees will reduce your budget, it is more cost effective than training a new employee.

Cost of hiring

It can take extensive time and effort from an internal recruiter to find the right candidate. Or it will be an expensive activity to employ an outside firm to recruit a high level employee or specialized skill set. You may have to pay a signing bonus to complete the deal with the candidate.

One way to lower your cost of hiring is to retain employees by paying for performance. Your HRMS can help you to track employee and team goals and whether those are being met or exceeded. If you link and pay employees for good results they are less likely to leave your company.

Cost of missing employees

When you terminate an employee you may still need to pay redundancy costs like salary or re-training when sending jobs overseas. While you may save some money on an employee’s salary in the long term employee morale will decline as your remaining employees do extra hours and work. Your HRMS can help you to alleviate this cost through recognizing where missing employees are having an impact.

Employee surveys are a feature of many HRMS that allow you to measure how employees are feeling about the company and their roles. They can also help to reduce employee turnover when you can see employee unhappiness in advance and can take action.

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Heather Batyski

About the author…

Heather is an experienced HRMS analyst, consultant and manager. Having worked for companies such as Deloitte, Franklin Templeton and Oracle, Heather has first-hand experience of many HRMS solutions including Peoplesoft and Workday.

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Heather Batyski