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5 Hidden Employee Turnover Costs

When an employee quits or you have to let them go, what’s your first concern? Is it how to fill open shifts or how to fill the position? When you lose an employee or let someone go, the result has more of an impact than open shifts. It includes hidden turnover costs.

There is the monetary impact of recruiting and hiring a new employee. In fact, studies have revealed that the average monetary cost to replace just one hourly employee is close to $5,000. What you may not think about when losing an employee are the hidden costs of turnover that take a toll on time and resources. Below are five hidden costs of employee turnover and how they impact your franchise.

Training Time

When a new employee starts, they must be trained. Usually, the choice of who to train the new hire is your best employee. However, when this is the case, your best employee is taken out of the equation of being fully productive during their shift. This means less productivity for the store and less profit being made.

Customer Experience

When you lose an employee, their on-the-job experience is lost along with them. When a new employee starts and struggles to keep up with customer orders, making food, fulfilling their duties, it has an impact on the customer experience. If your franchise is full of new employees, it can have a negative effect on the customer experience. When one customer is lost due to a poor experience, their lifetime value is lost along with them. In fact, Starbucks has determined that its LTV for an average customer is $14,000. They know the importance of treating their customers right and the monetary impact a bad experience has.

Productivity Loss

A seasoned employee has knowledge of processes and efficiencies that take time to learn. When you lose an employee with this knowledge and have to start over with a new employee, it takes time. During this ramp-up time, productivity is lost. The lost productivity impacts their co-workers, customers, and ultimately your bottom line.

Reputation Damage

Disgruntled employees love to leave reviews. With a plethora of online review options, from Yelp to Google to social media, these do impact your franchise’s reputation. It impacts whether people will apply in the future and also customers’ viewpoints on your establishment.

Culture Impact

When your current employees don’t get to work with their friends anymore or have to pick up extra shifts, it has an impact. Often, if people enjoyed working with someone who is no longer there, they also consider leaving. When people are constantly leaving, it impacts morale and can decrease productivity.

Overall, the impact of employee turnover stretches further than open shifts and money. It has an impact on other employees, customers, and your franchise’s bottom line. Learn how you can hire right the first time and reduce employee turnover with Sprockets’ Applicant Matching System.

Plus, learn about the importance of employee engagement in our recent blog.


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