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Effects of Employee Turnover and the Real Price You Pay

September 6, 2011

By: Carletta Clyatt

Reduce employee turnover with behavioral assessments!

The price you’ll really pay when an employee leaves could shock you!  Contrary to popular belief, when an employee leaves the job soon after he or she starts, it is not the price of another “Help Wanted” ad that is your biggest financial burden. In fact, that is one of the least expensive costs! 

Statistics show that when a person vacates a job within 3 months of hire, you and your company will end up paying -- in dollars and cents -- about what you would have paid that person in one year! A hefty price for poor planning? The answer is a resounding “YES”! 

With that in mind, think about your newest hire.  Think about all the time, effort and resources you put in to find this person.  What can you do to keep him/her from leaving to go work with your closest competitor?  

Think about the far-reaching effects of turnover: 

Overworked Staff:  While a departing employee’s days with you come to an end, his/her paperwork and ongoing tasks do not. It is often necessary to pay the remaining staff overtime to cover the workload in order to meet preset deadlines and satisfy the needs of busy clients.  If your staff are salaried you will not pay them additional dollars; however, your price will be the camaraderie lost among your employees as they become increasingly resentful of being overworked, pushed to their limits.   

Service:  Incalculable financial opportunities are lost by your company when your representative is no longer there to quickly quote prices for additional insurance products, deal with emergencies, answer questions, and resolve problems. Clients start to feel abandoned, when the face or voice they were just starting to feel comfortable with is replaced. The sense of relief and well being that many clients feel when dealing with someone familiar to them diminishes and takes time to be regenerated.  

Morale:  A departing salesperson or CSR can negatively impact the morale of the entire team, especially if that person was admired or thought of as a friend. Cynical comments about working conditions or pay rates might be voiced loudly by exiting staff members. Some of the remaining employees may go through a period of sadness, while others might opportunistically decide to reassess their own likes and dislikes about the company and make new demands. The loss is generally felt in one way or another and usually takes at least a temporary toll on co-workers and upper management.  

Your own time is money. Remember that the replacement of an outgoing employee requires you to pore over resumes, conduct interviews and sort through the positives and negatives of each job candidate. Hours that should be spent devising new plans, developing business strategies and attending to the needs of everyday business, are lost.  

So how do you avoid frequent turnover, save money, time and aggravation? You learn to be more savvy when hiring your next employee!  

When first-time clients plead with me to help them lower their turnover rate, I immediately ask if they’re ready to implement and commit to an action plan. They almost all unequivocally chime in, “Yes!”  While I’d certainly like to believe this is because I have captured their attention and they are hanging on my every word, reason tells me their fervor is probably because they are so desperate to avoid another bad hire they will agree to almost anything. The sting from a recent nightmare employee can be long-lasting! 

Now that we’ve weighed all the ill effects of frequent employee turnover, let’s go ahead and find ways to cut down on it. Clear-cut plans should be in place and ready to spring into action once a slot opens within your company. 

It is imperative to streamline your hiring approach and avoid these 4 managerial pitfalls: 

  1. Consistency:  One of the most common mistakes hiring supervisors make is being inconsistent when evaluating and/or selecting applicants. For example, if you sit down and talk to Candidate “A” for 35 minutes, you need to do the same with Candidates “B”, “C”, “D” & “E”. Doing or saying anything that might skew the results, give one person an unfair advantage (or disadvantage) over another, serves no purpose for anyone! Be sure to ask each candidate the same questions and try to use the same tone and expressions whether you seem to be speaking to a lively, flamboyant go-getter or a demure, gentle introvert. Spend ample time with each candidate and do NOT go with your “gut feeling”…doing so may quickly prove to be a big and very costly mistake.
  2. Not Enough Information: Too many companies fail to provide applicants with a complete and accurate job description of the position they are looking to fill. In some cases no job description is given, so candidates are unable to know for certain if they are truly interested in, and compatible with, the position. When an applicant knows the hiring company’s name and the title of the open position but little else, expect trouble. The more precise you can be in your outline of the job, the more likely it is that you will find an employee to suit your needs.
  3. Do Your Homework:  If a person is quite simply incapable of carrying out the functions of his or her role, he/she has what is known as “vocational incompatibility.” To avoid this, it becomes necessary to secure not only a clear understanding of every aspect of the position but also definitive information in regards to your applicants’ innate traits. Asking a shy, standoffish person to make cold calls, approach strangers, sell anything, is sure to lead to bitter disappointment and unrelenting failure. Do everything you can to be certain the person you are considering for the job is truly able to perform well and not just mouthing words you want to hear. Speak to references, call former employers, verify experience, perform background checks, or utilize one or more of several personality-assessment tools that are currently available.
  4. Environment:  Environmental incompatibility occurs frequently and causes stress, low morale and resentment in the workplace. It differs from vocational incompatibility in that it occurs when a person is, in fact, capable of doing the job, but unable to mesh in the work environment.  

Example: Let’s say you’re a manager who likes to keep a close eye on your staff; you make yourself available to answer questions, keep tabs on precarious situations and don’t mind it one bit when someone refers to you as a micro-manager. Remember Dave, your soon-to-be-gone salesperson? Did we ever establish why he was leaving? It could be that while he exhibited the traits of a typical entrepreneur, performed well and clearly had the drive, determination, personality and great sense of self-confidence needed for sales, he felt too stifled by your firm management. He wanted freedom while you wanted control. You each needed something from the other that neither of you were willing or able to give -- this is environmental incompatibility.   

It’s important to know the work habits and expectations of people before you hire them. ASK A LOT OF QUESTIONS! More time and money are wasted when two people, both excellent in their respective positions, have work approaches, communication styles and/or time expectations that are so different they clash. Disagreements, confrontations and/or sudden departures are inevitable.

  5.  Expectations:  Failing to set expectations and share them with your applicant will cause confusion, miscommunication and disappointment.  For example, you might be looking to hire someone who can be fully trained, up and running, proficient at many tasks within 3 months; however, your applicant may be the type who needs more time, likes to learn one task thoroughly before moving on and hates being rushed or pushed. To decrease the risk of mutually frazzled nerves and strong indignation after being hired, be sure to make your requirements and timetables clear during the interview. I often hear prospective clients say things like: “If I had only known before how far behind she’d be at this point, I would have…” or, “ I thought we’d end up on the same page, but, oh boy, was I ever wrong!”The lesson here is that if expectations are realistic and mutually agreed upon at the onset, an applicant can better determine whether he or she might meet your needs comfortably, must make work approach modifications, or should simply keep looking for another job.

To help avoid saddling yourself with another misfit employee, first take the time to know who and what you’re looking for. As you sort through the stacks of applications, cover letters and letters of recommendation, keep in mind that these are only small pieces of a much bigger puzzle. Stay focused on your objective to find the right person for the job, and remind yourself that spending a little extra time talking to applicants, scheduling multiple interviews and implementing hiring plans should pay off in the long run. 

While there will certainly be times when turnover is beyond your control -- as employees can leave jobs purely on a whim or due to very extenuating personal circumstances -- following the aforementioned strategies should limit it. Professional employee behavioral assessments can also help and are widely available to hiring managers who are looking to reduce turnover, improve their agency’s morale or learn new ways to enhance the performances of existing, but perhaps not so productive, employees. 

You’re busy, overworked, juggling several projects simultaneously, and are sure to have better things to do with your time than circling through a revolving door of ever-changing employees!

Carletta Clyatt

Carletta Clyatt, a popular seminar speaker, is the SVP at The Omnia Group. She offers clients advice on how to manage more effectively and gain insight into employee strengths, weaknesses and behaviors. For more information about employee behavioral assessments, call Carletta at 813-280-3026 or email:

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