The True Cost of Turnover?
You Might Be Surprised!

There are differing views concerning the actual cost of employee turnover. On the Bliss & Associates website, they calculate that turnover costs 150% of an employee's base salary. That is a large number, indeed.

Nonetheless, we feel safe in suggesting that the turnover cost for a nursing assistant lies somewhere between $2,000 per employee up to $2,500 per employee. We realize this is a conservative estimate. The cost for nurses will be appreciably higher. However, in our consulting practice and healthcare speaking we use a very conservative number for return on investment purposes concerning an organization's employee turnover.

The factors we have found that affect the cost of turnover include:

 

1. Employee orientation costs
2. Required certifications
3. Additional facility specific training
4. Workers compensation
5. Unemployment compensation
6. The cost to interview potential new hires
7. Advertising costs
8. The costs associated with paperwork and establishing new personnel
files
9. Costs incurred from making certain there are no criminal background
problems, State Registry alarms or other personnel concerns that
might cause survey compliance or other human resource issues
10. Customer service/consistency issues
11. Marketing/census issues related to high turnover rates
12. Fines/citations resulting from employee turnover issues
13. Lowered morale & poor motivation issues
14. High costs associated with agency or pool utilization
15. Costs resulting from communication breakdowns
16. On-going health care delivery errors, which can occur daily

The majority of costs associated with turnover come from the areas of advertising, orientation, interviewing, training, unemployment compensation, certification, and paperwork. However, it is important to note that many of the other "soft" issues that are mentioned in the list above have a direct effect on the facility's effort to become a provider of choice in their market area.

We have found there is a high correlation between an organization being the "employer of choice" and their efforts toward becoming the "provider of choice." Organizations with lower rates of turnover usually have higher rates of occupancy.

Many multi-facility organizations' turnover costs actually range up to nearly $3,000 per person when they figure all their efforts. While some of that could be soft dollars, we believe it is important to realize the true effect of high rates of turnover in any organization.

If you look at any organization that has 'problem facilities,' you'll find there are a high likelihood of employment instability at some level within the organization, if not instability at all levels. Since we are in the "people business," it is impossible to have product consistency and the resulting return on that investment unless you have employment consistency. These two go hand in hand.

If your organization is experiencing high turnover rates and the accompanying problems, you may want to consider implementing a team-based Recruitment, Selection, Retention project.

For more information on how to reduce turnover and increase employee retention read Clint's articles on the topic at http://clintmaun.com/articles/articles.shtml. Look at the articles indexed under the Co-workers section on that page.