Increasing unemployment rates drives voluntary turnover down, so it is easy to think voluntary turnover is not really a top of the list concern these days (the silver lining in the current environment?!).
This morning I saw some information that suggests it still should be. The article suggested that by 2018 – 2020 average turnover rates could range from 13% – 23% a year. Those levels probably look like a pipe dream to service industry organizations where turnover is much higher and are terrifying to environments where turnover is significantly lower.
It is well-known and understood that employee turnover is expensive – it costs between 50% and 150% of salary depending on the job. The aging population is driving the rate of voluntary turnover up. Each year, as the boomers age, there will be more people choosing to leave their jobs and the workforce.
For a 100 employee company with an average salary of $41,600 ($20.00/hr for a 40 hour work week) an annual turnover rate of 5%, turnover will cost the company at least $104,000 per year. If we use the Canadian national average annual salary of $49,000, the 5% turnover rate, at the 50% of annual salary cost, that number becomes $122,500.
Increase the turnover rate to 10% – well below those 2018 – 2020 projections – and use Alberta’s annual average salary of $60,476 (at December 31, 2014) the very conservative turnover cost of 50% of salary will result in turnover costs $300,000/year for a 100 employee company. At a cost 100% of salary that number is more than $600,000/year and at 150% it is upwards of $900,000/year.
It is easy to think this is something that can wait – today’s issues are more pressing. The solutions to today’s issues can establish the foundation for minimizing future challenges or they can ensure the future challenges will be more significant. Balancing the urgency of today’s issues with the importance of tomorrow’s is possible when there is a well thought out plan in place for doing so.