Employee Retention and Turnover

Costs Associated with Hiring A New Employee Recruiting (Advertising, Reviewing Resumes and Applications, etc.) Interviewing Hiring (printing name/security badges, running background checks, drug testing, etc.) Training (Books and Materials) Reduced productivity (Salaries for those who have to stop their day to day responsibilities to perform all of the above functions)

How Much is it Really Costing? SHRM, the Society for Human Resource Management, estimated that it costs $3, to replace one $8.00 per hour employee when all costs were considered. This was the lowest estimate of respected companies who calculated this cost!

Other Source Estimates It costs the company 30-50% of the annual salary of entry-level employees, 150% of middle level employees, and up to 400% for specialized, high level employees!

Quick Calculation Think of a job in the hospitality industry, perhaps a supervisor or manager. Let’s estimate their replacement cost.

Average Annual Pay for a Manager or Supervisor $50,000 X 1.25 (125% of their annual pay)

Replacement Cost $62,500 This means it costs $62,500 to replace just one supervisor. If this company loses ten supervisors a year, then 10 times $62,500 equals $625,000 in replacement costs for just supervisors. This means it costs $62,500 to replace just one supervisor. If this company loses ten supervisors a year, then 10 times $62,500 equals $625,000 in replacement costs for just supervisors.

The Bottom Line Our industry is very competitive! If our employees don't trust us to treat them fairly and respectfully, they will leave us. Our employees will go to other hotels and restaurants in hopes of better treatment.