The Costs of Employee Turnover

As employees move on in their life, they will be searching for a future to move up the ladder. This is shown in recent studies as the costs of employee turnover has been increasing dramatically. In the hospiality business, employee turnover is typically in excess of 120%. There are many issues associated with employee turnover; mostly to do with costs in time and money of the company.

Pre-departure costs will be incurred after an employee has given notice however before the employee leaves. This would typically mean exit interviews as human resources would want to find out the reason the employee may be leaving the company for. Recruitment is the next step. Human resources need to account for the costs of replacing the employee. This means that they would have to go out and put out a job posting for potential employees. Next would be the selection process. Interviews will be conducted at this time. The costs of interviewing and the decisiosn is a time consuming task as there is not a perfect employee for every position in the world. Afterwards, orientation and training is up. This is a necessary process as the new employee needs to require training for the tasks they'll be taking up in the future. This usually is followed up by associated costs including time spent training the employee. Eventually it ultimately comes to the productivity loss. Because of the lack of man power in that timeframe, this usually accounts for the largest percentage of total costs, up to 70% in certain cases. This is usually hurt in four ways, the lack of productivity of the employee that departed, the learning curve associated with teh job for the new employee, disruption costs as the new employee will most likely need assistance from their superiors and ultimately the loss of revenues or sales from the vacancy during that period of time.

Usually the result of these turnover costs are associated with te complexity of the job. The more complex the job, the higher the costs. This is usually due to the training associated with the job and the revenues they lose from the vacancy during the time they were looking for someone to fill the spot. And usually its the loss of productivity that hits businesses hard during employee turnover. Employee turnover is a continuing concern in the hospitality industry in the future due to the csots associated with it. It's the loss in revenues due to the loss of productivity that causes them to hit hard, and in this competitive environment, usually this means the loss of its competitive edge and that there needs to be solutions to these employee turnovers for the hospitality industries.