What’s the true financial cost of losing an employee? Hint: it’s often much higher than most employers realise!
The cost of turnover in Australia, according to PwC, is estimated to be $3.8 billion in lost productivity. On top of this, $385 million is also lost in avoidable recruitment costs.
Mortgage brokers are always looking for ways to cut costs and improve efficiency. One area that is often overlooked is staff turnover. The cost of training new employees can be significant, and it can take months for a new hire to reach peak productivity. However, the indirect costs can be even more significant. Loss of institutional knowledge decreased morale, and reduced productivity is just a few of the indirect costs that can add up quickly. When you take all of these factors into account, it’s not surprising that the cost of turnover can range from 100% to 300% of an employee’s annual salary.
The hidden costs of employee turnover
When an employee leaves your company, it can be costly in more ways than one. In addition to the obvious costs associated with advertising and training a replacement, there are also hidden costs that can impact your business in both the short- and long term. Here are a few examples:
Lost productivity: When an employee leaves, it takes time for their replacement to get up to speed. In the meantime, your remaining employees may have to pick up the slack, which can lead to decreased productivity across the team. According to a study by the Centre for American Progress, it can take up to eight months for a new hire to reach full productivity.
Reduced morale: Employee turnover can also lead to reduced morale among your remaining staff. Not only are they having to work harder to make up for the loss of their colleague, but they may also begin to question their own job security if turnover is high in your company. This can lead to even more employees leaving in a vicious cycle that becomes increasingly difficult to break.
Increased healthcare costs / sick leave costs: Believe it or not, losing employees can also lead to increased healthcare costs for your company, as well as sick and absence costs. Companies with high levels of voluntary turnover often see a decrease in employee engagement, which leads to increased healthcare costs (if you offer healthcare) as well as increased absenteeism and presenteeism (employees coming to work even when they’re sick).
So what can you do to reduce turnover and keep your best employees around?
Fortunately, there are some things that you can do to reduce turnover in your mortgage broker business.
One of the most effective things that you can do is to invest in employee development. This can include things like offering tuition reimbursement for employees who want to further their education or providing paid time off for employees to attend professional development seminars.
Another way to reduce turnover is to make sure that you are hiring the right people in the first place. This means taking the time to screen candidates carefully and doing your best to ensure that they will be a good fit for your company culture.
Finally, are you equipping your employees with everything they need to do their job well and feel a sense of purpose in your company?
Staff turnover can be a costly problem for mortgage broker businesses, so don’t think these problems will resolve themselves. If you’re having turnover problems, let’s talk. Book a time with me below to see how we can help.
