WHAT ARE THE DAMAGES WE MEET WHEN LOSING AN EMPLOYEE?

As we known, there are a lot of major factors having a great impact on the development of your organization. Especially, workforce is one of the important resources in our businesses. Therefore, they are the factor creating directly diverse valuable spirits and material benefits for whole organization, that’s the reason why the labor force is the internal influences on the growth of business.

For the position as leaders and managers, we have to particularly take care most of problems in regarding to our staff, and each of decisions must apply in two-way, such as the improvement, increasing the majors, salary, visible and invisible profits, which are sent to an employee. Moreover, the interaction between leaders and their staff always have to perform, in order to understand clearly their problems, their demanding as well as the feedbacks about the process working. According to Goalify, it’s a useful way to reach successfully our ambitious goals.

Implementing this solution into organization is a big challenge, which requires good knowledge in regarding to the basis and major management. Because of this principal reason, we would like to put a helpful article here, in order to assist leaders in understanding the important contribution of the labor force in our organization, and motivate to develop various solutions in the human resources management, it’s likely to move organization to the right direction, all the best for our ambitious objectives.

1. The total picture for sightseeing about the damage when losing an employee

According the research of Society for Human Management America, leaders and managers will have to pay the cost similar to one employee’s 6 to 9 months salary, in order to hire and train a newbie to replace this old one. Let’s make a math, we are going to understand clearly the cost: there is an employee paid $60.000/year, this one stops working, the company will have to pay for 30.000 USD to $45.000, and this is the hiring and training cost for the replacement.

Another research showed us that the hiring cost is frighteningly expensive, as reported as Development America Center, the expenditures have to be paid for the replacement about 16% to 213% this one’s salary in every hour working. It’s more surprised with the real cost paid for a higher position employee. For example, the salary of this one is 120.000 USD every year, the loss expenditures of company will be paid higher one’s compensation, maybe 255.600 USD.

According to Singapore Business Review, the proportion of staff turnover in Singapore is assumed to be as high as 15%. The replacement costs are depended on several factors, especially on how many years the person stay in the organization and on how easy it is to replace their range of skills, it’s normal when the cost is between 50% and 200% of one employee’s salary.

2. The expenses will be paid and the profits will be lost when losing an employee

Goalify has mentioned about the total loss expenditures will be paid when an employee stop working. In addition, we wants to emphasize everything, which is damaged, deeply up to down. As stated in the research of Josh Bersin from Deloitte company (one of the biggest Auditing Company all over the world), there are many damaged things happened when losing an employee, such as:

• The recruitment cost: It’s the basis cost paid for quitting job of an employee. To notice that hiring websites always arrange according to gradations, which are concerning in major abilities and experiences of employees. It means that the expenditure for hiring high levels staff is extremely expensive. On the contrary, this hiring cost is cheap for finding out the lower levels employee, but Goalify would like to warn you that your organization will pay the higher expenditures , because there is the opportunity cost for training this employees.
• The training cost: As Goalify mentioned, if your business luckily hires staff possessing high major abilities and experiences, you can save much money for guiding a newbie. But, unfortunately, you will have to be faced with paying high training expenditure.
• Reducing productivity: It’s the principal problem concerned with many professional qualifications. Although newcomers has many good skills for observing new job, the unique culture engagement of your organization is totally strange to them.. They will have to arrange their whole working time to habituate themselves to your business’s culture engagement. Therefore, spending the duration about 1 – 2 years to reach more effective productivity or satisfy manager’s expectations in their working is one of many required conditions for newbies.
• The lack of employee engagement: When jumping to a new position at a new place, every employee must accustom himself or herself to the new environment, this issue makes his or her process working not smooth, because of wasting much time to adapt the new culture of business.
• The high failure proportion in the working process: This is the consequence of many factors, such as the engagement employee, the working deployment, the workload management, the working process…
• Other employee’s mentality are influenced by losing an employee: The other employees are easily impacted by one question, that is “Why did my colleague decide to quit job here? What’s the principal reason? Do I meet the same occasion?”

3. The relationship between the newbie, the beginning of working durations and the productivity

Source: Employee Retention Now a Big Issue: Why the Tide has Turned

According to Goalify, leaders and managers of the whole team have to understand clearly about a primary problem, which is the relationship between the ability of newbie, three early working stages in this new environment and the productivities in each of this three stages.

• The first stage (0-4 weeks): A newbie has just reached about 25% productivity, the other proportion is about the loss expenditures for this person.
• The second stage (From the fifth week to the twelfth week): The productivity of this staff has been able to reach the maximum working speed, which is about 50%. By the way, the organization has paid each of the loss expenditures, which is about 50%.
• The third stage (From thirteenth week to twentieth week) : The productivity of the new member has been able to reach the highest proportion, which is about 75%, and the loss costs have paid approximately 25% the salary of this staff.

This is the relationship between three factors: The integration of newbie, the productivity and the loss expenditures of business. Next, we have one more question: How to reduce the number of resignation effectively or keep the stable turnover rate at low? This positive result totally does not depend on the human management of leaders or managers. There are many exceptional things, such as the compensation, benefits, Goalify affirms that the interaction is the most important factors to understand clearly the insight of employees and leaders. That are all of principal reasons having an impacting on the turnover rate of staff, Goalify encourages you reference OKR methodology and the engagement employee in the effective working process.