EMPOWERING PEOPLE….. ……….TRANSFORMING ORGANISATIONS
Welcome to your November Newsletter.
This month it’s all about high staff turnover related issues
and the financial impact on your business.
Feel free to forward this to anyone you feel will benefit from reading it.
Damian and the MindStore Australia team
Does your organisation have problems with high stress, low morale, low productivity and high employee turnover ?
Do you recognise any of these challenges in your organisation?
- high staff turnover,
- staff retention issues,
- staff burnout,
- low workplace moral,
- stress related issues,
- negativity in workplace,
- reduced performance,
- increased absenteeism?
If you found yourself saying yes to any of the above then you are not alone. Many HR manager’s, team leaders, business development managers and department heads are feeling the same pain as you.
Everyone accepts each of the above issues has a financial cost to companies, but very few people have calculated their direct financial costs, or indeed the underlying additional costs.
In a survey carried out by Mercer Human Resource Consulting, Mercer estimates that staff turnover costs in Australia range from 50% to 150% of annual salary depending on the role and level of seniority. So, in a company with 250 employees earning an average annual salary of $49,000 each, and using Mercer’s forecast staff attrition rate of 25%, the cost of turnover for that company would be more than $3 million per year. Furthermore, if that same company had annual revenues of $30 million and a profit margin of 12%, staff attrition would represent 10% of total revenues – and 85% of profits.
If this was your business would you want to take action to change this situation?
Would solving this challenge become higher on your agenda?
The findings of the above survey are reinforced by the two headlines below from www.news.com.au :
“A 2008 report by Medibank Private, Australia’s largest private health insurer, calculated the costs to the economy of employee burnout at a staggering A$14.81 billion a year.”
“A study released on 6th October by Vic Health reported that preventable job stress is draining $730 million a year from the Australian economy. An estimated 1.5 million workers have been diagnosed with depression from excessive job stress, costing businesses more than $8000 per person every year, said the report.”
In the current economic climate many companies are reviewing budgets and look to make savings in all areas. In many cases the first budget to get cut is the training and staff development budget.
Although this does save money in the short term, many companies do not fully appreciate the value of training and development to employees. They only see what they can save by not spending on training, they are ultimately missing out on the huge negative cost implications for the business.
Have a read at the list of costs below both direct and indirect and think as you read them about what the financial $ cost to your company would be in each example.
The costs of high staff turnover:
Every time an employee leaves and has to be replaced, an operation incurs a number of direct financial costs including:
Separation costs -administration cost associated with processing resignations and dismissals, time taken up in conducting exit interviews, productivity losses associated with impending departure.
Vacancy costs – lost productivity and or additional costs such as overtime or contractor payments to cover the vacancies created by departures.
Recruitment costs – advertising, employment of job search agencies, time and resources spent in processing applications, staff time involved in selection interviews, medicals, background checks, travel costs for short listed candidates.
Training and start up costs – the time of trainers and staff and of new employees taken up in inductions and on the job training, loss of productivity until the new employee reaches full production potential.
In addition to the above direct costs, higher turnover of staff can have the following indirect costs:
- adverse effects on operational efficiency, especially for complex processes that require close teamwork and high amounts of assumed knowledge.
- the continuing instability in the workforce.
- increased stress and tension amongst those remaining employees, who have to take up the slack left by departing employees.
- risk of burnout by remaining staff.
- decreased productivity and declining moral due to loss of work group synergy.
- difficulties in maintaining a positive safety culture as new employees are likely to be more error prone than their experienced counter parts.
This all can add up to a negative workplace culture of distressed, under-functioning employees which then affects the new recruits in a self perpetuating manner.
Take Action today:
Don’t let your investment in staff and the massive amount of knowledge they possess slip through your fingers. Take the time and energy and invest in your staff.
Take action today and find out how your staff can learn to manage stress, to discover ways to improve their attitude, to reduce absenteeism, to uncover how to increase individual and team performance and reduce your high costs of staff turnover through burnout?
MindStore has the solutions for you. Contact us today to arrange a meeting.
At our meeting we go through a process with you to identify your key pain issues in your organisation and then produce a no obligation report for you with benefits and solutions specifically designed for you.
Also if you feel this would be of interest to other friends or colleagues, then forward it to them so they can access the benefits MindStore can offer too.
Your feedback and comments:
As MindStore continues to grow and develop in Australia, we are always looking for feedback and comments from our current newsletter members on ways to improve. If you have an idea you would like to share, or a comment about how we could make MindStore more accessible to more people then please let us know.
MindStore is available throughout Australia from its base in South East Queensland to deliver customisable in–house corporate training sessions and business improvement courses co-designed with your organisation. The positive advantages of MindStore’s in-house sessions include the best techniques for managing stress, maintaining a positive mental attitude and influencing all those around you. You’ll learn to apply Whole Brain thinking for improved creativity and problem solving. Modelling your business’s behaviour on the winning approaches of world champions and leading entrepreneurs empowers your organisation to gain competitive advantage through innovation and enhanced performance. For more information visit www.mindstoreaustralia.com