This week's Alemian File addresses the enormous cost of turnover. Most people never look at the actual numbers, because if they did they would be shocked and would try to do more about it.
Turnover costs are absolutely enormous. Most people never look at the actual numbers, because if they did they would be shocked and would try to do more about it.
Turnover costs affect us all because when costs go up, prices go up. However, when turnover rates go up, production quality can go down. We can end up paying more money, yet we receive lower quality for whatever we’re paying for. In the world of healthcare (which is one sixth of our economy), lower quality can have dire consequences for some. The opposite is true when we lower turnover rates. Lower costs can mean lower prices, higher profits, and higher quality; and in the world healthcare, higher quality means better patient care and that’s good for all Americans.
Turnover costs are typically a multiple of salary with some exceptions to certain occupations.
For example: The turnover costs for executives and most professionals earning $100,000 and up is 213% of salary. Turnover costs for employees in the lower to mid-level rage are significantly lower and down around 16 to 20% of wages or salary.
The impact of turnover costs in high paying industries like healthcare is absolutely enormous. Healthcare organizations have dozens of executives and clinical staff all earning six-figure salaries. The true cost of replacing a physician is somewhere in the million-dollar range. Nurses are 130% of salary.
You now know how to calculate turnover costs for your own organization. When you add it up in real dollars, it’s literally in the millions for even a small healthcare organization and in the tens-of-millions for a larger healthcare organization. This is why organizations must re-think their retention strategies and look at pension plans for two reasons.
1) Pensions are the most powerful retention tools ever designed.
2) Pension plans that are funded with bank financing are up to 67% less than turnover costs.
If you have questions or comments, send an email to David@theAlemianfile.com. Visit my website www.CapitalCrestFinancialGroup.com. Absolutely make sure you come back here next week for another edition of The Alemian File.