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Why Do Good Employees Quit and What is It Costing Your Company?

Why do good employees quit? Simply put, you haven’t met that employee’s needs. When thinking about their job, employees feel one or more of the following: undervalued, underwhelmed, underpaid or overworked. Each leads to feelings of discontent and bad news for you. If you didn’t see signs of unhappiness before they quit, the main reason they are leaving is probably you, their manager. According to Marcus Buckingham and Curt Coffman, “If employees don’t get along with their managers, don’t like them or don’t respect them, they will leave a company despite a high salary or great benefits. A bad manager is a big factor in employee performance. A good manager, no matter the salary, will inspire loyalty.” Good employees leave because they believe another company will treat them better.

Why is the loss of a good employee bad for you and your company?

Decreasing your turnover rate by half saves your company $75,000 each year.

If your company’s turnover rate is 9.8% and you have 50 employees earning on average $60, 000 annually, your hard cost of losing five employees over a year is roughly $150,000 (at 50% cost of salary). Decreasing your turnover rate by half saves your company $75,000 each year. This freed-up capital is now available for investment in those employee retention strategies: additional benefits, training and development programs, and recognition awards.

Other hard costs of replacing an employee include recruitment and hiring of new employees. There is also a substantial investment of both time and money in training each new employee; especially, when you consider the cost of pulling your tenured employees away

from current or new projects to assist in the completion of this new hire training. Not only that, once these new employees are trained, there is a considerable learning curve before he or she is capable of performing at 100%. And, unfortunately, these are just the most evident monetary costs to replace those employees.

There are other inherent (mostly intangible) costs of losing a good employee:

  1. Any investment you’ve made in his specialized training or education.
  2. That non-quantifiable, on-the-job experience.
  3. Established, positive customer relationships – which you may lose when the employee leaves.
  4. Established, positive employee relationships – which may cause you to lose more staff.  Good employees know the other good employees. They want to work together; even if it’s not for your company.
  5. Decline in employee morale.
  6. Lastly, the future. What future contributions are lost as each good employee leaves?

How do you keep good employees?

In order to keep good employees, you meet their needs; the only way you’re going to do that is if you know those needs. Don’t make the mistake of assuming your needs match your employee’s needs. Ask. According to M.H. Dyer, “If a good employee feels stuck in a dead end job. there’s a good chance that employee will move on to a job that provides potential for growth, personal development and increased responsibilities. The best employees thrive where they feel challenged and are presented with opportunities to better their skills.” It is incumbent upon you, their manager, to open an honest dialogue about expectations –- both his and yours.

Category: Bank

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