When expenses like separation pay, interview costs and training are taken into account, the cost of replacing a single employee can be astronomical. In fact, according to the Society for Human Resource Management, it costs a whopping $ 3,500 to replace just one employee making $ 8 per hour – and that number is the lowest provided by 15 recent studies on the cost of turnover.
While turnover costs are high now, experts project that they will quickly rise even higher. As the first Baby Boomers turn 60, many are beginning to retire. The generation just now entering the workforce contains about 33 million fewer individuals, meaning that employers are finding a much smaller pool of talent to choose from. This smaller talent pool makes hiring quality employees even more expensive.
To reduce turnover, it is important to understand why employees are looking for other opportunities. In a survey by the Society for Human Resource Management, employees considering leaving their current position were asked what factors played into their decision. The number one response given was that they were seeking better compensation and benefits.
If you do not have the budget to provide your employees with higher pay or more lucrative benefits, this information could be extremely frustrating. How can the boring possibly stop when there's no extra money?
While you may not be able to retain your employees by raising salary or offering more benefits, you could make them think twice about accepting other job offers by providing them with detailed benefit statements.
These statements look similar to a traditional pay statement, but they attach a dollar value to benefits like health insurance, 401 (k), time off, and even perks like free parking or company cell phones. They can be generated at a very low cost through online benefit statement software.
If your employees do not know how much their benefits are worth, they are almost certainly assuming that their total compensation is lower than it actually is. Many would be surprised that the average US employee with an annual salary of $ 50,000 actually has a total compensation of over $ 70,000 when all benefits are taken into account.
By showing your employees the monetary value of their benefits, you'll read their perception by showing them that the grass may not need to be greener on the other side. This can help reduce turnover and, in turn, drastically reduce your hiring budget. The money that you save by reducing turnover can always be reinvested in your employees, giving them the compensation and benefits that they've been seeking all along.