This is my third post on element of the business case for engaging and retaining women. It focuses on the most obvious element—the cost of losing good employees. As we’ve already covered, women constitute nearly half of the “talent pool”—and more of the educated segment of the pipeline. Holding on to women as well as men enables employers to get the documented value of gender diversity, covered in an earlier post. But the numbers clearly show that women tend to be less satisfied in their jobs and leave their employers at a higher rate than men. That means a large segment of the workforce (women) may be disengaged, driving up involuntary turnover.
There are obvious “hard” costs of turnover—and less visible but very real other costs. Costs associated with turnover vary by industry and the level of the job being replaced. Experts estimate the hard costs of losing some employees at 100-150% of total compensation (base plus benefits); the range for other jobs is 150-200% of compensation. When an employee disengages and thinks of leaving—and then leaves—the costs may include:
- Lost productivity of the disengaged employee
- Decrease in morale (and therefore perhaps productivity and quality) from those who work around a disengaged employee and former employee
- The time and energy of employees who must step in for the former employee
- Lost investment in training the former employee—and the costs of training the replacement, including the time of more senior employees doing the training
- Recruitment expenses
- Increased costs (and time) for recruitment if the employer’s reputation as a good place to work has been damaged
- Loss of clients with whom the former employee worked
- Decline in customer service and satisfaction during transition period
What other costs of turnover have you experienced?
It is obviously good business to create an environment where more employees are engaged and want to stay. If turnover in your business is higher for women or any other group, I recommend that you identify drivers of dissatisfaction and disengagement. Saving turnover costs alone may justify the investment. Getting the value of an engaged and diverse workforce makes it a no-brainer!