Across all departments in a company, the human resources department typically has the highest turnover rate at over 14%, as reported by LinkedIn. With this high turnover rate comes a decline in HR employee productivity, company knowledge and morale. With 61% of HR professionals employed in their current role for less than two years, constant restructuring affects the ability to maintain consistent operations.
Without a properly functioning HR department, your company could end up failing to attract and maintain the top talent in your industry. Before it is too late, ask yourself, “How does turnover in HR affect my company’s bottom line?” Then, take key steps to prevent high HR turnover rates.
Financial Costs of High Turnover
The actual financial costs of high turnover rates in your HR department depends on the role and wage of the employees you need to replace. According to Employee Benefit News, it will likely cost your company 1/3 of the employee’s salary to find and hire a replacement.
Therefore, for a single worker earning $45,000 a year, finding a replacement employee can cost your company up to $15,000. If you are looking to replace an employee at the executive position, however, costs could run up to 123% of the employee’s salary.
With high HR turnover rates, your company will spend a ton of money to attract and acquire top talent, potentially impacting your bottom line. Small to medium businesses, in particular, may suffer serious impacts to the financial health of their companies.
3 More Ways HR Turnover Can Affect Your Bottom Line
Understanding how high HR turnover rates can affect your bottom line can help you prepare to prevent this situation from occurring within your own organization. Get started by exploring the three main ways HR turnover can impact your company.
1. Productivity Loss
With a high turnover rate, the HR department experiences a minor to severe productivity loss, depending on the role of the employee in need of replacement. The decline in productivity will likely persist until your company can find and fully train a new employee. Unfortunately, for most companies, it takes up to eight full months to train new hires, according to Atrivity. If it takes 1-2 months to find the replacement employee, your company could have a stall in productivity for almost a year’s time.
2. Low Morale
Without your HR department operating as expected, your employees may not receive the support they need. Furthermore, your remaining HR department employees will have to work double time to make up for the lost productivity. As a result, your employees’ morale may drop considerably, leading to a decrease in the quality of their work. If allowed to continue in this manner, your company’s sales and reputation could end up on the line.
To fill your HR department job vacancies, your team will need to invest extra time into finding a good replacement. On average, it can take up to 52 days to fill an open position, as reported by Wrike, though it could take longer for specialized roles within your HR department. During this time, your other departments and their operations could go without what they need, as attention is diverted to filling the open roles.
Partner with a PEO to Optimize Your Payroll, Benefits and HR Procedures
To ensure your HR department job vacancies do not impact your bottom line, you will need to take action before this situation has a long-term effect. You can effectively eliminate the risks of high turnover rates by partnering with a skilled and experienced professional employer organization, or PEO. Your talented PEO will handle all functions of your HR department - including hiring, payroll and benefits management - and help you optimize your business operations.