Turnover and safety: How it hurts
By Madison Hanscom, PhD
Many in safety have seen it firsthand – high turnover can be a safety concern. When there is a revolving door of employees coming in and out of the organization, this can create issues when it comes to sustaining a strong safety record. Because new employees come in without deep knowledge of the job, they are more likely to get into accidents. And it is not their fault — new hires are still gaining experience and training. You are only as good as the people on your job site, and if this is constantly changing, this can create safety boundaries. A small degree of turnover is warranted and keeps the culture stronger by weeding out people who are not a great fit, but if too many people are leaving, this is a sign something is wrong.
What are the costs?
There are also a great deal of costs associated with turnover. These come into play when it comes to separation (e.g., processing paperwork, exit interviews, severance pay), lost productivity (e.g., knowledge transfer issues between previous and existing or new employees, vacancy cost, pre-departure productivity loss), recruiting a replacement (e.g., search and agency fees, recruiter time, HR time), selection costs (e.g., managerial interviews, applicant travel, HR functions), hiring costs (e.g., onboarding, managerial administrative functions, orientation), and training.
How much exactly does this cost businesses? There are many estimates out there that vary by location, industry, and so on. A common estimate shows it is about 21% of the worker’s salary to replace the individual (1), and this usually grows higher as the person is more specialized or is at a higher position within the company (2). For instance, it can range anywhere between 5.8% to 213% of the individual’s annual salary depending on their job position and skills (1).
What industry is most impacted?
According to the Bureau of Labor Statistics, the industry that experiences the largest amount of voluntary turnover (quits) is the accommodation and food services industry (even after accounting for seasonal workers)(3). Other industries with a high number of employees to quit are professional and business services, and retail trade (3).
For more on how to deal with turnover, please see part 2 of this blog.
At Propulo Consulting, we care about the health and wellbeing of all workers. We partner with you to improve the world of work using the latest insights from research. Our team has the expertise to help your business build a safer and healthier culture.
(1) Boushey, H., & Glynn, S. J. (2012). There are significant business costs to replacing employees. Center for American Progress, 16, 1-9.
(2) J. Bruce Tracey and Timothy R. Hinkin, “Contextual Factors and Cost Profiles Associated with Employee Turnover,” Cornell Hospitality Quarterly 49 (1) (2008): 12–27.
(3) Montgomery McCarthy and Larry Akinyooye, “Job openings, hires, and quits set record highs in 2019,” Monthly Labor Review, U.S. Bureau of Labor Statistics, June 2020, https://doi.org/10.21916/mlr.2020.12.