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Calculating the High Cost of Employee Turnover

Among the many hidden costs of operating a business and managing employees is the high cost of employee turnover.  Loss of employees due to injury even temporarily or to another employer has a major financial impact on your organization.

The costs of turnover that can be measured directly fall in two areas: exit costs, and replacement costs. Exit costs include things like severance pay, costs associated with an exit interview, outplacement fees and possible litigation costs, particularly with involuntary termination.  Replacement costs are the costs of hiring, including sourcing expenses (advertising, using recruiters, etc.), processing costs for screening candidates, time spent by  managers interviewing candidates, travel and relocation expenses, signing bonuses (if applicable) and orientation and training costs.

There are a number of other areas, too, that turnover adversely impacts, although probably harder to quantify. Indirect costs actually represent the greatest losses for an organization. Turnover results in a loss of productivity in the employee as well as co-workers and managers due to general disruption of the work group. Potentially even more damaging are the lost sales and lost customers resulting from an employee leaving. Employee retention is not only critical for cost-efficiency but an important factor in revenue growth as well, because of its direct link to customer relations and retention.

Given the high percentage of employees who seek new employment opportunities as well as suffer from work related injuries, managers and supervisors need to understand turnover’s costly impact. It is crucial to evaluate your organizations hiring and safety practices to attain and retain good employees.

For more information regarding Workers’ Compensation and Safety programs  contact  your Kapnick Insurance Group representative, visit www.kapnick.com or contact Amy DeKeyser, Risk Services Coordinator at amy.dekeyser@kapnick.com.

For more information on capturing senior level support and/or implementing a health management program, please contact Sarah Szul.

 In a recent Gallup poll, it was discovered that only 14% of workers are at a healthy weight with no other health conditions.  From January to October in 2011, Gallup polled 109,875 full-time workers.  Two-thirds gave height and weight figures that indicated they were overweight or obese, while half are overweight and have at least one chronic health problem.

Chronic health conditions include having had a heart attack, high blood pressure, high cholesterol, cancer, diabetes, depression, and/or recurring physical pain in the back, knee or leg in the last 12 months.

Gallup estimates that American miss about 450 million days of work each year because of these health problems and it could be costing the economy more than $153 billion a year in lost productivity.

With these kinds of statistics, employers would be well-advised to consider taking immediate and significant measures to enhance employee health and productivity.  A Performance-Based Health Management Program, such as Kapnick Strive, is the tool needed to identify, track and improve employee health.  The first component in implementing any type of health management program is to capture senior management support.  From my perspective, everything revolves around this critical component.

Step 1: Establishing Common Ground

The first step in the process of capturing senior-level support is to establish common ground.

- What kind of results do our executives want to see from our wellness initiative? (e.g. cost savings, health improvement, etc.)

- Are we sure that these are the results they want to see?

- What does this mean for our wellness program?

- What are the most important outcomes we can share with our senior-level team?

Step 2: Connecting Emotionally

The second step in effectively engaging senior level execs in supporting the company’s wellness initiative is to connect emotionally.

- What kind of personal stories of health improvement already exist within our organization?

- How might we best tell them to our executives?

Step 3: Making It Personal

The third step in engaging senior level exec’s in supporting the company’s wellness program is to make it personal.

- How are our senior exec’s doing with respect to their overall health status?

- Is there a champion for personal health among our executive/management team?

- What resources might we leverage to help our senior level exec’s protect their health and become healthier?

Step 4: Supplying The Evidence

The fourth step in engaging senior level exec’s in supporting wellness within our organization is to supply as much evidence about the success of worksite wellness programs as we can.

- What resources already exist to help us do this?

- Are there other company’s within our industry that have built great wellness programs?

- Are there other company’s within our community that have built wellness programs that would capture the attention of our senior level people?

- How can leverage this information to our advantage?

Step 5: Connecting The Dots

The fifth step to generate support within the senior level execs is to help them better understand the specific steps to implementing a workplace wellness initiative.

- What are the best practices for a successful wellness program?

Step 6: Building Skills

The final step in capturing senior management support is helping executives build the skills necessary to effectively lead the company’s wellness initiative.

- How can we help our senior level people be more vocal when it comes to our wellness program?

- How can we help our senior level people be more visible when it comes to our company’s wellness program?