The Financial Cost of Employee Turnover

Strategic planning consultants

A challenge every executive faces within a company is to develop and nurture a culture that increases employee satisfaction and retention. This organizational culture can operate on a lot of principles, including integrity and treating people with respect and kindness, but the sum total is designed to make sure employees enjoy coming to work–and so that good employees won’t leave.

The cost of replacing an employee is not very well known. Here are some statistics:

  • The average cost of replacing an employee earning $8 an hour is $3,500.
  • The cost of replacing middle level employees can be as high as 150% of their salary.
  • The cost of replacing high level employees can be upwards of 400% of their salary.

And turnover continues to be a major problem for many companies, as statistics also show. 2.5 million Americans quit their jobs every month, with the average turnover time for an hourly employee being four months. The median number of years the average worker as been at his or her job is 4.4, while the number is 2 for Millenial employees.

Often, an organization’s culture can lead to higher turnover than average. The typical manager spends 25% to 40% of their time dealing with workplace conflicts, and 66% of Americans say that work has a significant impact on their stress level. With one million U.S. workers missing work each day due to workplace stress, it’s important to analyze the culture of your organization to see if there’s anything you could be doing better.

Shaping an organization’s culture is difficult. Executive coaching or business coaching could put your top leaders and difference makers on the right path very quickly. It’s not just for everyone at the very top. Executive coaching can make a difference for people in key areas or high level young leaders with great potential.

Executive coaches could help improve a client’s perception in areas like conflict resolution and strategic planning. Some term executive coaching as getting the individual to think differently and act differently within the workplace.

When considering whether you or an employee of yours could benefit from executive coaching, make sure to analyze what is expected of the client. The client needs to be coachable, to take suggestions, and then work to apply them. Also, think about the problem this employee (or you) is facing right now. Would it be more easily tackled through executive coaching?

Companies that use executive coaching generally see a 7x return. And keep in mind that executive coaching engagements usually last between six and nine months.

When working to improve your organization’s culture, it’s important to remember how a high level employees actions may filter down to the rest of the organization. Kindness, respect, hard work, and optimism may all be important parts of your organization’s values but making sure that productivity is at a top-notch pace and employees are being retained equal the bottom line.

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