Question

More and more companies (particulary in the high tech sector with its heavy human capital requirements) are finding themselves burdened with mounting HR costs and are taking a second look at their compensation and appraisal packages in light of employee turnover.

Describe some of the costs associated with increasing employee turnover and suggest what an HR team's role might be in. minimizing them.

Answer 1

Employee turnover is so expensive because organizations pay direct exit costs when an employee leaves and incur additional costs to recruit and train new hires. Direct exit costs can include payouts for accrued vacation time and unused sick time, contributions to healthcare coverage, higher unemployment taxes, and severance pay. Side effects of turnover, such as decreased productivity, knowledge loss, and lowered morale, can incur incidental costs, as well. Cost associated with High turnover of the employees include uncompleted works, decreased productivity, chaos and conflicting situations, that impacts on the output and lead to wastage of resources and time. When employees leave the firm, then the management feels challenging to get the work done and find difficulty in hiring new candidates, investing in training and development programs, and retaining them.

When an employee leaves, their responsibilities are absorbed, to an extent, by the employees around them, adding additional work to their already lengthy to do lists. However, when you’re short-staffed, there will always be work that won’t get done.

Job dissatisfaction can increase when employees are tasked with additional work and longer hours, causing them to question their own reasons for staying with an organization. There's no overstating the fact that employee recognition is crucial during this period. Low employee morale can result in decreased productivity, creating a cycle that can also lead to negative changes in company culture.