Click image for larger version

Name:	e.jpg
Views:	1
Size:	11.0 KB
ID:	183
Cost of LEAVING!!

Employee turnover has become an uncontrollable and never ending process these days because the young, dynamic employees are constantly looking for a job change as they are not committed and not content with what they have. Employees are often reluctant to identify the true causes for their decision to resign and tend to provide more “socially acceptable” reasons for leaving. Hiring a new employee isn't a decision that should be taken lightly, as it doesn't fall lightly on the company budget. The specific impact of replacing an employee varies based on many factors. On a larger scale, the company is badly affected in various dimensions. Out of which, waste of capital and resources stand first.

Moreover, the organization when hires a person, invests a descent amount on him to give him training and in addition to it, also gives a good time for him to adjust to the work environment. Later when the employee is performing good will offer few incentives in order to appreciate him in regard of his performance and to retain him in the organization. But when the employee leaves the organization, it is easy for the company to fill his place but again starting all the things from the initial stages is a waste of resources and time.

The various costs involved in hiring a new employee when the existing employees’ leaves are like the recruiting costs, training costs, lost productivity costs, new hire costs, lost sales cost, etc.
The costs of employee turnover can be estimated in a number of ways, depending on whether the calculation includes both direct and indirect costs. The direct costs of turnover include separation and replacements costs as follows:

Separation costs:
 Severance costs
 Unemployment insurance premiums
 Out placement fees

Replacement costs:
 Advertising costs
 Training costs
 Interviewing time
 Pre-employee assessments
 Relocation costs

Indirect costs include the harder-to-measure variables such as the loss in organizational knowledge and skills, reduced corporate growth through lower productivity and the negative impact on organizational commitment that frequent turnover can have among the employees who stay at the organization. These indirect costs can often be greater than the direct costs of turnover.

BOTTOM LINE: This is not to suggest that only the pay has influence over an employee’s decision to leave. Rather, this issue emphasizes the need to be sensitive to both “push” and “pull” factors that may have influenced the employee’s decision. There is substantial academic and business literature demonstrating the importance of employee satisfaction in building loyalty to an organization and, by extension, reducing employee turnover. It should be noted that the costs of time and lost productivity are no less important or real than the costs associated with paying cash to vendors for services such as advertising or temporary staff. These are all very real costs to the employer.