How Much Does Employee Turnover Really Cost?
The Green Apple Podcast does weekly “Green Apple Slices”, where John Garrett and Rachel Fisch discuss a recent business article related to the Green Apple Message. These shorter segments are released each Monday, so don’t miss an episode by subscribing on iTunes or an Android app.
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Good morning. It’s John Garrett coming to you with another episode of Green Apple Slices. And I have on the other line, the cohost partner in crime, accountant group leader for Canada and Sage. I mixed up the “for” and the “and,” but you get it, Rachel Fisch.
Rachel: Hey, John. How are you?
John: I’m clearly not doing excellent, but I thought I was until this morning and then I — but we’re all good. We’re all good. But yeah, but we always get together and talk through something about employee engagement, culture, things like that and how it applies to the accounting, consulting, legal space. Yes. This one, I thought was really great on a blog for a company called Lattice. It’s How Much Does Employee Turnover Really Cost. I think this is something that people forget about and don’t really consider all of the costs that are involved.
Rachel: Yes, or it’s kind of like this nebulous that you know it’s going to be more expensive. Yes, it’s going to be more expensive but we’re going to do it anyway or they’re going to quit anyway or we’re not going to put in the work we need to retain our employees anyway and stuff like that. But this, oh, my soul. Cuts to the — you can calculate how much it’s going to cost you. I love a little cheekiness. I’m not sure if you need that about me, John. The fact that it starts out, people, our companies most important assets, we’ve all known this for a long time, but we pay a lip service more often than we try to actually do something about it. I’m like okay, I’m so reading this whole article.
John: Yes, absolutely.
Rachel: And then the next thing is, it’s true more now than ever and I really need that now more than ever because at any moment, this could be the best podcast episode now more than ever or this is the most important — yes, because we’re better than we were 100 episodes ago. That’s just the way that it works in the world. Anyway, so that was — but moving on, this completely fed my data geeky, like I had to put on my glasses in my pocket projector to really think through some of this but it is fantastically detailed when it comes to the elements of awareness and how it actually changed behavior and then the actual physical cost in spreadsheet that you can actually be calculating some of this. It’s absolutely fantastic for sure.
John: Right, totally. I think the now more than ever is the fact that it’s actually measured. It’s actually — in a similar, they had a parallel case of people in the even in the eighteenth century knew that smoking wasn’t good for you but there was an actual data to prove exactly how bad it was for you. And so now, it’s similar to that and I love how they equate for taking care of your employees in a bad way to smoking which is great.
Rachel: Great. It’s like we are Green Apple Podcast is your surgeon general’s warning people.
John: There you go. No pressure, no pressure at all. Rachel over there with her glasses and pocket protector and me. That’s all the reason I keep you around, Rachel, is because I look really cool. No, not at all. But yeah, I mean it’s amazing and it talks about — people can — I think it’s easier just to go to greenapplepodcast.com, click on the link and see the article there. But the graph that shows this is just — people are always talking about the lifetime value of a client or a customer into how much revenue they’re going to bring in over time. But I think we forget that it’s the exact same thing for our most important asset like you said, RP.
John: And what’s the value of an employee or a staff nurse?
Rachel: Absolutely. It goes through the phases between the economic value to the organization where you’re in a negative. So you know what you’re getting hired and on boarded in going through the training process. And then at some point, they are generating revenue for the company. Even if they’re overhead, there are some production value. They’re helping me build the business and so on. And so what that actually looks like — well, of course, as soon as they leave and you have to start from scratch again, that thing drops right down to the bottom again. And so, yeah, there’s a couple of graphs on here that visually, really tell the story well. Please guys, if you’re going to read the article, click on the links. There is some amazing resources and stuff that are connected to this article as well and so check those out for sure.
John: Super quick examples blow people’s minds. If you’re 150 person company with 11% turnover which is probably low in the accounting space, but you’re going to spend about 25,000 on hiring, 10,000 each of turnover and development and then lose about 50,000 in productivity, opportunity cost. That’s an annual turnover cost of one $1.57 million to your company.
Rachel: And yet, you can go through and you can say okay, yeah, but that number makes sense. Okay, yeah. And yeah, that makes sense. But then, when you add all up the grand total is like, oh, my soul. I have no idea that it would — and part of the frustration for me is that especially coming from the accounting world is that when it comes to cost, numbers on paper sometimes don’t mean as much as –oh, that coming out of your bank account is going to hurt. And so, in this case, this is money not gained, right?
Rachel: Not money coming out of your bank account. And so, sometimes it doesn’t feel quite as pressing. But when you see them display it in a case like this, then it really drives it home that no, this is costing you serious money.
John: Yeah, absolutely. Everybody, check out the article. Really cool stuff. It’s at greenapplepodcast.com. Don’t forget to hit subscribe because Rachel and I get together every Monday and talk through some stuff. And then on Wednesdays, I have one on one interviews, me with people that are known for passions and interests outside of work. If that’s you or somebody you know, let me know. I would love have them on and follow us on Twitter as well. That’s it. Everybody get back to work. Go have fun and enjoy the rest of the week.
Rachel: Yeah, you too, John. Talk to you later.
John: See you, Rachel.