SQLServerCentral Editorial

The Cost of Employee Turnover

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Sometime during the first 3-4 months of the pandemic, after offices all over the world closed, I thought that a lot of businesses would try to hold on to existing employees and minimize turnover. I also thought many employees would be nervous about changing jobs amid all the uncertainty.

That wasn't the case everywhere, and I was surprised at how much employee turnover occurred in many companies during 2020 and 2021. We had the Great Resignation, where talented employees (and some not-so-talented) found new employment with lots of remove flexibility. We typically have low turnover at Redgate, but more surprising to me was the number of people we've hired in the last two years.

Our gains come from losses elsewhere. It seems a lot of companies have had a bit of turnover, more than they liked.  The costs of replacing a staffer has climbed to an average of USD$57k, according to a recent poll of hiring managers. I'm sure this is a combination of the time and money spent on recruiters and interviews as well the lost productivity of having less people around.

For many of us working in technology, we realize that losing good people is a problem. Often we lose undocumented knowledge about our systems,  those shortcuts, checks, small tasks, not-so-obvious fixes, and more that make life easier. We can feel more stressed about additional work, or even the anticipated unknown challenges we might face. Moral, productivity, and motivation decrease, which creates a snowball effect. Everyone gets less done, which costs the organization more. Either lower revenue, more costs, or perhaps fewer services for those government or non-profit concerns.

With large tech companies letting lots of talented people go, I wonder if we'll see more competition in the employment market. For quite a few years there have been fewer workers than there are jobs. Perhaps that changes a bit in the future, though I still think there are not nearly enough talented workers for the positions open. Good for talented workers as they may have more choices, but also good for less talented workers when companies feel pressure to hire anyone.

Except, what I've seen in a lot of companies is that they don't want to hire anyone. Having a degree or cert isn't enough. Companies aren't going to hire you because you are Azure/AWS/etc. certified. They want tech skills and at least a few soft ones. That creates an even higher cost to fill positions, so maybe that USD$57k isn't a bad number.

To me, what this really means is that organizations ought to look at poor management, both middle and upper, and replace those people. That's the problem in many places, one that isn't easily fixed. Poor culture, micromanagement, lack of support, little-to-no psychological safety, and more contribute to poor retention.

Culture is important and building it is hard. While not everyone will have a great culture, many organizations can avoid a poor one by treating people fairly and ensuring management understands how to do that. If for no other reason than to avoid the high costs of replacing staff.

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