Employee turnover is a major concern for every business owner. According to one study, it costs U.S. businesses $160B a year. You rely on your employees to deliver a high-quality product and to engage with your customers. So when your business is losing qualified and high-performing staff, there’s a problem.
Can your SME business afford high turnover?
The impacts of employee turnover are even higher in Small to Medium-sized Enterprise (SME) businesses. Why? Because negative effects are amplified in smaller organizations. SMEs are less likely to have as many resources and infrastructure to mitigate the impact of high employee turnover, meaning adverse effects snowball.
The financial impacts of losing a team member will vary by employee type and industry, but a study from the Center for American Progress offers the following benchmarks:
- Less than $30,000/year: 16% of annual salary
- $30,000 – $75,000/year: 20% of annual salary
- $75,000+/year: Up to 213% of annual salary (highest for hard-to-replace, high earning CEOs)
SME Business owners need to consider not only the cost of recruiting a new employee, but also the loss of productivity while a role is vacant, and the cost of onboarding and training new staff. In a smaller business where profit margins are often tighter, these costs will be disproportionately high.
Blows to employee morale
High employee turnover can become a vicious cycle. As employees leave, remaining employees often end up picking up the slack. SME businesses are less likely to employ multiple people with overlapping skill sets and may find it challenging to cover vacant roles from within the team. This can create tension and job dissatisfaction until more employees decide to leave, perpetuating the cycle.
Reduced quality and risks for your business
If your employees are losing morale, their output may suffer. Suddenly your product quality is declining, your customer service complaints are on the rise, and sales are beginning to dip. The financial cost of employee turnover quickly spreads beyond a line item for recruitment, and directly to your bottom line.
How smarter recruiting can help reduce your turnover risk
While there are many approaches to reducing employee turnover, the Mindfield team believes in starting at the source. We focus on helping our clients hire engaged employees and take an innovative approach to recruiting. By using industry best practices, we find best-fit employees who will help grow your business and stay for the long run.
Some SME business owners overestimate the cost of outsourced recruiting. But when a high-performing employee can deliver 400% beyond the capabilities of an average employee–and when the risks of constant turnover are so high–the investment you make in recruitment can pay itself back many times over.
By working with a recruiting partner like Mindfield, you benefit from expertise, resources, and scalability. We help you recruit quality candidates for your business at a lower cost than it would take you to do it by yourself (especially when you consider the time and effort recruitment can take, leaving you less time to run the business).
Interested in learning more? Discover how our solutions can help support your SME business.
Mindfield is a Recruitment Outsourcing solutions provider that partners with companies to create powerful hourly workforces. Our solutions combine a recruitment team, simple to use technology and a data-driven hiring strategy that promises to improve the quality of your hourly workforce. This approach focuses on tying business outcomes such as sales performance, tenure, and engagement to the selection, hiring and measurement of quality candidates.