The Cost of Staff Turnover

dreamstime_xs_279610What does staff turnover cost you? Over the years I’ve heard numbers from a few thousand up to tens of thousands of dollars. A simple Google search of “Employee Turnover Cost” will lead you to a number of studies and articles on the subject, along with how the results are calculated.

Maybe you’ve run into this concept in the past and wondered how it could possibly cost several thousand dollars to replace a $10 per hour employee.

Staff Turnover Costs

When you turn over an employee, there are several obvious and  hidden costs, which might include:

  1. Advertising and interviewing new people.
  2. The time (cost) spent dismissing the prior employee.
  3. Any costs associated with severance pay, unemployment percentage increases, etc.
  4. The costs of having the position unfilled (money you’ll lose or not make due to no one there).
  5. Time and money spent training the new employee.
  6. The cost incurred through lost revenue or productivity by keeping a non-performing employee in place.

Personally, I’m not in love with losing or having to replace employees. I doubt many people are. Like most, I prefer to find good, productive people and keep them as long as possible. And while it’s fine to prefer this, it’s impossible to ignore the fact that turnover is going to happen. People move, they take other jobs, they go back to school, or maybe they just don’t work out.

So if turnover, even small amounts, is an eventuality in just about every business, what’s the best way to keep the costs down?

Keeping  Costs Down

Before I give you my answer, let me qualify that I am not an employment attorney and laws can vary from state to state. I leave it to you to consult with the appropriate legal professional if you have questions on these issues, since you (not me) are ultimately responsible for whatever you do in your business.

My answer to this is pretty simple. Of course, you would want to make sure your training programs are effective and efficient and you would want to replace people fast. That’s a given. In my mind, however, the biggest reasons for the high cost of staff turnover are:

  1. Lack of trained personnel resources for promotion (in the case of losing a productive employee to an out-of-state move, company change, or career change) and
  2. Keeping people who aren’t working out for way too long.

Fixing #1 means you should always be on the lookout for good people that you can bring in. Also, you should ensure that the people you already have are continuously in training and thereby becoming an even more valuable as resources for your company. For example, let’s say you’re a dentist and your Treatment Coordinator is leaving. You might have a receptionist who is really sharp who you’ve been training more and more during their employment. Chances are, replacing a receptionist would be easier than finding a new Treatment Coordinator. It’s simple then: bring in a new receptionist, have the old incumbent turn over the job, and then promote your tried-and-true (and well-trained) receptionist to Treatment Coordinator. Now of course there are variables here, such as how much time you have to replace these people as well as whether they can even fill the new position. Just throwing out an example.

Number 2 above is where I see people make the biggest errors. You’ve hired an new dental assistant. After a couple of weeks, you’ve seen enough of their performance to know it’s not going to work. So you spend six more months training them and hoping it all will work out. During this time, you’re less productive than you would have been with someone who could perform the duties of the job as required. (So you’ve lost there.) You’ve also spent time and money training this person. Finally, you throw in the towel and dismiss them. And the hiring and training process starts from scratch. Had you not waited, you would have saved bundles on training and not lost all that productivity.

So, the lesson here is: If it’s not working, don’t wait…wait…wait. Make the decision sooner. It will cost you less in the long run.

We cover issues like this and many others on dental practice management in the MGE Power Program. If you would like to learn more, give us a call.

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