A company that employs around 10,000 workers can easily end up spending $41.3 million solely on employee turnover costs if they engage these workers as direct hire, internal employees. Companies waste a phenomenal amount of money on recruiting, statutory employer and training costs when these employees – who have been lavished with resources - decide to leave after just a short period of time.
An average salary for an entry level position is only around $30k/year, but the cost to replace this level of employee can be up to $22.5k. For mid-management positions, the average annual salary is $70k/year, and the cost to replace these employees rises to about $52.5k. Senior-management level employees earn an average of
$150k/year, which will cost the company an unbelievable $112.5k when they need to replace them.
Across the board, regardless of the level of skill, experience and pay rate of the worker, the turnover rate for a company this size is thought to be around 11% and the cost to replace the workers is a staggering $75% of their pay rate. Taken together, Entry level + Mid-Management + Senior-Management turnover costs = $41.3 m in total wasted spend for a company of 10,000 workers.
However, companies of all sizes could stand to save money on their turnover costs, especially in this economy. Often, engaging workers’ on a temp to hire basis can be a great way to find out if a candidate is both suitable for the role and fits into the company’s culture before they take on an internal, direct hire position as an employee.
By offering positions on a temporary 3-6 month contract, both the employee and the company can figure out if they are mutual fit.
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