10 May The Cost of Staff Attrition
The Cost of Staff Attrition
In simple terms, employee attrition in a business refers to the loss of staff members. This reduction of staff is simply by a normal means; for example, resignation, retirement, or maternity leave. Hubb Consultants sees this as the normal life cycle of any business; when it comes to attrition, the staff members are not leaving due to issues with their role or management, it is simply because of life growing and unfolding.
However, as life unfolds, do you know what this may cost you as a business?
Direct and Indirect Costs
An example of a direct cost is the remuneration costs. A staff members remuneration cost creates the basis for the other cost calculations. Essentially an employee’s remuneration is their base wage or salary, plus the value of their employee benefits, plus the value of their on-costs.
Yet, along with that, there are also the indirect costs. Have you thought about your employee’s replacement, and the loss of productivity whilst finding a replacement? This is an inevitable result of staff attrition. Of course, to keep the business running, other staff members may need to perform tasks of the vacant role. The cost of this is calculated by using an estimate of one-third of each staff members daily recruitment cost and multiplying it by the total number of days they will be taking on those extra tasks.
Keep in mind there are other indirect costs such as in-house hiring costs, training and induction costs and termination administration costs.
When looking at all these factors that create the total costing of employee turnover due to attrition, it does raise the question of, “how can a business increase employee retention?” Of course, retirement is an example of an unavoidable reason of staff attrition, however, improving your business to retain employees can definitely mitigate these costs.
Hubb Consultants can advance your organisation to reduce these extra costs effecting your company; contact us today to find out how we can help you.