Staff turnover is defined as the rate at which an employer loses employees. Every manager knows that keeping good employees is great for the bottom line. According to one source, many studies show that turnover can cost around 1.5 times the salary of the departing employee. For a company with employees leaving at a high rate, the costs associated with finding new employees can be overwhelming. Or, so, this has been the line of thinking for CFOs and Human Resource reps for the last few decades. Now, there is research that suggests that the negative impact from turnover isn’t as dramatic as we all have believed for years.
In 2005, a study entitled “Why Most Published Research Findings are False” concluded exactly what the title would suggest. The paper by John Ioannidis concludes academia’s failings stem from sample sizes are just too small to make the wide-ranging claims they’re reaching for. In order to correct these perceived failings, Mr. Ioannidis launched the Meta-Research Innovation Centre at Stanford. The group of researchers will monitor and collect different studies from research centers from around the world. Their process is called “meta-analysis,” which will try to correct inaccuracies by looking at more data. This research process is exactly how researchers have now concluded that long-held beliefs by CFOs and HR specialists concerning staff turnover are wrong.
The meta-study is complex, but basically, researchers have concluded that the cost of turnover is less than the previously thought 1.5 times the salary of the ex-employee. In fact, according to their research, the cost is much less. Here is what they found: -.03 (not -1.5) is the damage done by staff turnover. This is, to say the least, a big difference.
Of course, there is still a lot of value to be gained by holding onto to good employees. But now some companies may want to rethink their views on staff turnover.