The True Cost of Employee Turnover
Written by: Dawn Lee
One of the biggest challenges for companies in Singapore is retaining employees.
According to a report by IDC and Workday, the top 3 countries with the highest expected turnover are Singapore, Malaysia and Australia; with 46% of employees in Singapore who are likely to leave their jobs within a year. The main reasons cited by respondents when it comes to switching jobs include better compensation, career prospects and work-life balance.
Employee turnovers are costly and it plagues every company. However, employees are the main assets of all organisations, thus retaining these talents should be one of the priorities for any company.
By definition, employee turnover is the measurement of the number of employees who leave an organization during a specific period of time. Companies should identify their employee turnover rate as the cost is correlated with a high turnover rate. Exactly how much is lost per employee to turnover?
According to a post by Panalyt, a company is estimated to lose $12,000 a year, per employee that leaves. And based on the US Department of Labour, they estimated that it costs about 33% of a new employee’s salary to replace an employee who has left their company. Furthermore, these costs increase for jobs at higher levels where skills are important.
Besides the quantifiable cost related to turnover, there are intangibles that are overlooked.
When there are many employees leaving the company, an increase in workload amongst the remaining employees is inevitable. The increase in stress can cause frustration which in turn lead to poor morale. Due to herd instincts, experiencing others leave can negatively influence the rest who are still with the company. This can lead to employees who were on the fence taking action and leave the workplace as well.
Poorer quality of work
With an employee departure, the remaining employees will have to pick up additional tasks until a replacement comes. Current staff may find it difficult to cope with the additional work on top of their current duties. This may lead to the submission of sub-standard or inconsistent work and also affect client relations.
What can you do to improve employee retention?
Hiring the right talent
With the highest expected turnover in the region, it is important for companies in Singapore to find the right talents even though it may take significant time and resources. Hiring managers should search for people that they believe will have a long-term relationship with the company rather than settling for the first candidate that meets their requirements. While filling the immediate needs of the business is important, hiring an employee is a long-term investment and should require more consideration. Ultimately, hiring the right talent is about establishing a mutually beneficial relationship that will contribute to the growth of the company.
Providing a great onboarding experience
Onboarding is a critical component and increases the likelihood of employees staying with the company. According to the Society for Human Resource Management, 69% of employees are more likely to stay with a company for three years if they had a great onboarding experience. Furthermore, new employees who went through a structured onboarding program were 58% more likely to be with the same company after three years.
On the other hand, a poor onboarding experience will lead to new employees facing confusion and may result in a decrease in confidence.
Building a strong culture of support and development
With the acceleration of digitisation, there is an increase in demand for digital talent and skillsets. For some, it is seen as an opportunity, while others may see it as a threat to job security.
In order to foster a positive culture and reduce job unhappiness amongst Singaporeans, business leaders will need to focus on creating conducive work environments which will not only motivate employees to stay in their jobs but also reduce absenteeism which will save costs in the long run.
When it comes to turnover, companies need to think about investing in training programs, providing better incentives and keep employees engaged. If you have a turnover problem, let Reeracoen Singapore help you with our experience in recruiting in Asia. Get in touch with our consultants and build your winning team today.