Employee Turnover

A business man with an hourglass and text reading "How Much Time Is Lost When an Employee Leaves?"

How Much Time Is Lost When an Employee Leaves?

How Much Time Is Lost When an Employee Leaves? 1016 528 Sprockets

It can be challenging to estimate the average time lost when employees leave. After all, there are numerous potential factors, including your type of business, the amount of training you provide, and your employee recruitment process.

However, every manager and business owner knows that losing an employee costs valuable time. Perhaps more considerably, in most businesses, this time lost equates to money lost as well.

Evaluating the Amount of Time Lost When Employees Leave

There are three main ways that employee turnover can cost your business time:

Of course, losing an employee means you no longer have their labor hours. The work that your former employee was doing is now nonexistent. This is especially true for former employees who don’t give an appropriate length of time for leave notice (if they chose to quit).

You also lose time because you have to devote labor hours toward recruiting a replacement employee. Now, you’re allocating hours toward searching for a new hire. The current labor market, your company’s needs, and the level of skill required for the position can all increase the time it takes to hire a replacement. Plus, you need to advertise and vet potential candidates. Unfortunately, the time it takes to hire employees can be extensive when you don’t have the proper tools to streamline the hiring process.

It’s important to consider the time it takes to properly train the new employee and bring them up-to-speed in the workplace. This amount of time varies depending on your business, but it can be considerable. Don’t forget: You will need to think about how long it takes for a training manager or fellow team member to teach the new employee. This potentially doubles the hours necessary to train a new employee.

What Can You Do?

Implement Strategies to Improve Employee Retention

If you want to avoid the costs of employee turnover and run your business as efficiently as possible, you need to keep your employees happy and healthy. Employee retention initiatives vary from business to business, but the basic concept is to make working at your company preferable to working at a competitor’s company. Some initiative examples include salary incentives, career growth opportunities, paid time off, and insurance benefits. You can even start something as simple as a weekly happy hour for your team to engage outside of work.

Investing in your current employees reduces the lost time and money from turnover. It’s a win-win for both employers and employees to create a positive work environment.

Hire Applicants Who Will Stay Long-Term

Improving employee recruitment is one of the best ways you can reduce the lost time of employee turnover. There are three main ways that a better recruitment process will help you reduce lost time.

First, having a better system in place to locate and hire new employees will make the actual recruitment time period shorter. When this system is improved, you will find qualified candidates more quickly. You will move to the onboarding phase sooner and replace the former employee’s work hours in less time.

Additionally, you will not have to devote as many human-resource hours toward the actual recruitment process with a more efficient system in place. Remember, the hours that your human resource employees spend also factor into the amount of time you lose. These hours could be spent elsewhere.

An improved employee recruitment process also increases the number of high-quality candidates you attract to reduce your turnover. Being able to focus only on the ideal candidates, rather than having to stress about weeding out poor fits for your positions, ultimately reduces the overall time spent.

The Solution: Sprockets’ AI-Powered Hiring Platform

A woman showing a laptop screen of the Sprockets hiring platformOne of the best ways to reduce the time lost on employee turnover is to integrate Sprockets into your hiring process. Our sophisticated solution to hiring combines artificial intelligence and over 80 years of psychological research to identify the ideal applicants for your needs. It’s not magic — it’s logic.

Plus, it’s proven to work with numerous business owners in a variety of industries, including home health care, quick service restaurants, call centers, and more. You could be the next success story! 

A man and woman looking at a tablet and text reading "How to Maximize Your ROI as a new Franchisee"

How to Maximize Your ROI as a New Franchisee

How to Maximize Your ROI as a New Franchisee 1016 528 Sprockets

If you want to get out of the nine-to-five rat race, become your own boss, and you have some seed investment money set aside, your best bet might be venturing into franchising opportunities. Let’s dig into it and see how a franchisee’s return on investment can be maximized.

Kick-Start the ROI of Your New Franchise Venture

Choose the Ideal Franchise

Once you decide your path is with a franchise, you’ll need to choose the right franchise brand for you. There are numerous franchises out there, so it is a big undertaking to choose which ones offer the most profitable opportunities. Of course, saying this is easy. Making the decision is not. There are several considerations before you find your match made in heaven. 

Conduct extensive research by completing these tasks prior to your decision:

  • Reach out to various franchisors for information
  • Talk to other franchisees about their experiences
  • Consider your initial finances
  • Research your intended location

Build a Business Plan

Preparation is essential if you want to maximize the ROI of your new business venture. While many franchisors provide new franchisees with proven business plans, you might be left to your own devices with certain companies. Don’t worry, though. Simply view our blog on how to build a business plan for a new franchise location. It features a step-by-step walkthrough to help you get started on the right foot.

Track Performance

You won’t be able to improve the ROI of your franchise business if you don’t track performance metrics. Set up a list of business goals and key performance indicators (KPIs) to keep long-term goals in mind while still focusing on the day-to-day operations that drive success. Note: always make sure you set measurable goals rather than abstract ones that are difficult to track.

Then, set aside time monthly, quarterly, or annually to identify areas that need improvement. Find out what went wrong, make a plan for how to get better, then put your plan into action. With hard work and little luck, you’ll stay motivated, surpass your goals, and be able to continuously set the bar higher.

Hire Applicants Who Will Drive Success

Two people shaking hands during an interviewDid you know that employee turnover can cost employers upwards of $5,000? This can drastically reduce the ROI of your franchise when you think about how many employees you might lose over the course of a year. Not only do you lose productivity, but you also need to spend time and money recruiting, screening, and training the replacement employees.

Avoid costly turnover with Sprockets’ sophisticated solution to hiring! We combine natural language, artificial intelligence, and over 80 years of experience to find applicants who are the precise fit for your needs — and are likely to stay long-term. It might seem like magic, but it’s not. It’s logic.

Chefs in the kitchen of a restaurant

Four Tips to Engage Restaurant Staff Members and Reduce Employee Turnover

Four Tips to Engage Restaurant Staff Members and Reduce Employee Turnover 1200 600 Sprockets

Fostering a sense of team unity is an excellent way to make your restaurant the best it can be. Facilitating team activities, goals and a common vision are great ways to encourage employee engagement. With a strong team, you’ll see better productivity, retention, and profits. Encouraging team unity doesn’t simply mean playing a few ice breaker games at pre-shift meetings. It is a deep-rooted, multi-faceted initiative that should stem from a good deal of thought and planning that has a real impact on business. In fact, 86% of employees and executives state that workplace failures are a direct result of a lack of collaboration or ineffective communication. To strengthen your team, we’ve compiled four team building tips for engaging restaurant staff members and reducing employee turnover.

 

Encourage Informal Social Gatherings

If team-building is established as extra work, your staff members won’t be as apt to join in. But, promoting informal social gatherings on a day the restaurant closes early is a great way to encourage team building. When staff members can gather outside of pressure-filled shifts, they gain quality time to get to know each other. Gatherings could include a shared meal at your restaurant, or an outing to see how a rival restaurant operates and discuss what they see as working or not working. 

 

Encourage Employee Contribution

Every single person has been in a work situation or meeting when they have had the urge to voice an opinion or idea but chose to keep it to themselves for a variety of reasons. This can often lead team members to feel that their input and opinion isn’t valued.

A great way to foster a team culture is to encourage employees of all levels to contribute. A great way to start this process is to leave a specific time allotment for employee contribution during meetings or project discussions. Encourage leadership to actively listen and encourage the sharing of ideas. This doesn’t mean that everything will be smooth sailing when it comes to team contribution. However, the simple act of encouraging employees to speak up builds up a strong company culture and helps people feel that they are an important part of a team.

 

Establish Clear, Open Communication Lines

The saying “communication is key” is especially important when one of your major goals is building a sense of team unity. Establishing clear, open lines of communication is the first step to ensuring the success of a team-building endeavor. Individual employees should have a common communication line, such as a team leader or senior team member, that they can go to with progress reports or questions. Employees should never be discouraged from communicating. However, it is also important to establish up-front what type of communication will be beneficial to work toward a common objective or goal. For example, complaining or going off-topic will only develop unnecessary traffic when it comes to communication.

 

Recognize Accomplishments

Did your restaurant recently meet its monthly sales goal? Identify staff from every aspect of the restaurant that had a positive impact on meeting that goal. That may include a server that went above and beyond, a bartender who stepped up and took open shifts, or a shift leader who got great reviews from a customer. Employees that receive recognition for their accomplishments will be encouraged to continue their work endeavors. While building your plan to recognize key contributors, it’s also important to outline how you can recognize and reward the accomplishments of the restaurant staff as a whole that contributed. This may include an extra bonus or a free meal voucher for them and a guest.

 

As you grow and engage restaurant staff members, check out the Sprockets platform. Our Applicant Matching System is designed to assist restaurant owners and managers in hiring the employees by matching applicants against your best people. 

 

Recommended for you: Interview Questions for Cashiers and Front of House Staff 

A smiling woman explaing the importance of cultural fit for restaurant employees

The Importance of Cultural Fit for Restaurant Employees

The Importance of Cultural Fit for Restaurant Employees 1200 600 Sprockets

Many factors go into a hiring decision. For instance, hiring managers often consider applicants’ work experience, hard skills, and soft skills. In recent years, the importance of cultural fit has become even more apparent too. In fact, some businesses have begun to give cultural fit equal weight with other attributes or even prioritize it. What exactly is it, though, and why is it important in a restaurant?

 

Defining Cultural Fit as it Relates to Restaurants

In a nutshell, cultural fit is how well an employee’s mentality and behavior line up with the particular values and culture of your restaurant. Unfortunately, restaurant owners don’t always have a handle on what the culture is truly like within their restaurant. One scenario is when, on paper, the restaurant owner supports a philosophy of letting its employees be as independent as possible. In practice, shift managers micromanage the staff members. 

Now, a diner may pride itself on its family-oriented culture, particularly if it is a family-owned business. Or it may tout itself as lean and determined. It may emphasize that its employees need to be able to make quick, good decisions, or it may explain that its employees need to be well-versed in carrying out orders. Some restaurants, however, don’t fully understand what culture fit is and why it’s important. When they do hire, they don’t consider that aspect of applicants’ profiles, and that’s a big mistake.

 

Everything Is Amplified in a Restaurant

From our experience, we’ve seen that practically everything is amplified in a restaurant. That is a major reason why hiring for culture fit is critical. There are fewer employees who work long shifts together and fewer channels of communication. More direct contact takes place between customers and every employee in the business. If something goes wrong, it’s liable to go wrong on a bigger scale.

Indeed, just one “bad” hire can do horrendous damage to a restaurant. The damage need not be anything as direct as an employee angering an important customer, although that can and does happen. Rather, it can be indirect like a long wait time, and build up to a devastating level over time. 

 

Consider the following:

Someone who doesn’t fit with the culture of the restaurant is hired. Let’s say this person resents following a rotating schedule and doesn’t really follow the dress code requirements and shows up with blue hair to your upscale restaurant.

This person’s attitude affects the morale of the other employees, who bristle at the new hire who comes in late, leaves early, and appears as they please. Employees’ productivity and morale drops.

Now, some restaurants are able to offer more flexible schedules to employees and have relaxed dress codes. However, not every restaurant is like this. Your employees need to be able to understand and follow the values of your business.

 

Limited Space to Experiment

A restaurant doesn’t have as much room as a large corporate to navigate and make mistakes. So, it’s worth investing additional resources and time to find a proper cultural match. In a larger business, someone who is a bad culture fit might affect the morale of the immediate team members, but that may be where the ripple effects stop. In a restaurant, it’s likely that everyone who works there and the customers could be affected.

 

The Ripple Effects

Earlier, we touched on a few ways in which bad culture can affect the business. Here’s a bulleted list that outlines a more extensive list of examples:

  • Bad work quality
  • Lowered productivity
  • Lowered job satisfaction
  • Decreased morale
  • Poisonous work environment
  • Higher employee turnover
  • Stressed, possibly resentful employees
  • Decreased profits
  • Lost customers

Say that Bob and Jane see their co-worker at a restaurant constantly arrive late and leave early. He calls in sick often and shows up with ripped jeans, not allowed in the dress code. He is slow getting to customers and doesn’t refill waters as often as others on the waitstaff. Bob or Jane (maybe both) may begin to question why they’re even bothering to be productive employees when this guy does what he wants and gets paid the same as them. They resent the employee and begin to think less of their boss for hiring this person. Bob or Jane leave the position, and the search must begin anew for another employee.

Even if your restaurant is laid-back, a poor culture fit can still be harmful. Take a coastal restaurant that encourages employees to wear T-shirts and shorts. A new employee is hired who checks off all the hard skills on paper. Everyone’s excited, but problems may arise quickly if this employee shows up each day wearing a button-down shirt and slacks. For instance, the employee may not mesh with other team members and lose motivation to work. It’s costly to keep an unproductive worker around, and if that worker leaves, to go through another hiring process.

 

Diversity Is Important

You can still have diversity in your small business while hiring for cultural fit. Actually, having a diverse workforce can help your business become quite successful. We want to emphasize that a cultural match does not equal hiring people from the same backgrounds and with similar experiences.

 

Nailing Down the Fit

To be sure, business culture can be tough to nail down. Since it’s important that everyone in the business aligns with its values, how can a business succeed if half of the employees are creative thinkers and half are more rigid thinkers? It’s because culture goes deeper than that. What type of thinker you are matters less than attributes such as self-awareness and ability to collaborate effectively. So, a business filled with employees who practice different methods of thinking/approaching problems can still be extremely profitable. These employees just have to align with a company culture of, say, respect, and collaboration. Having diverse people in your business is an excellent thing, but the culture fit still needs to be there.

 

Practicalities Matter

On the most basic and practical level, the right employees matter for restaurants because they don’t have as much time and resources to spend on hiring. When you hire the right type of person, you hopefully won’t be hiring all over again in a few months when that person leaves. On a deeper level, making several poor hires for culture (or even just one bad hire) may lead to a toxic work environment and hurt the bottom line of your restaurant. If the restaurant keeps hiring people who don’t work out, there may be a mismatch between the perceived (“on paper”) culture and the actual culture. Alternatively, hiring processes may need to be changed, and the people doing the hiring should become more aware of cultural issues.

Overall, making the right hire for a business is important to employee morale, productivity, and the bottom line. To ensure you’re hiring the best matches for your restaurant, learn about Sprockets’ Applicant Matching System.

Someone holding money that they saved while hiring

How to Save Money While Hiring

How to Save Money While Hiring 2048 1365 Sprockets

It costs $4969, on average, to replace an hourly employee. This takes into account lost productivity, time spent on interviewing and hiring, and the costs of job postings. By cutting down time to hire, building your talent pool, and being confident in your hires you will also save money while hiring.

 

Hire Right the First Time

The way to save the most amount of money is simple. Hire right the first time. When you make the best hire for your company, you will see the positive impacts on your business. Increased productivity, a positive attitude, increased retention. But, it also means that you won’t have to make new hires as often – saving you thousands of dollars. To increase your confidence in choosing the right applicant, learn how Sprockets can help.

 

Build Your Talent Pool

One of easily identifiable monetary impacts on the hiring process is posting open positions! While some avenues are free, many have “sponsored post” options to make your position stand out, which adds up. This is why it pays to build your talent pool, so you have applicants to turn to when the position becomes available. A talent pool may include information about past applicants that were great but not needed at the time, employee referrals, and even avenues like Facebook or LinkedIn groups for people in your industry. 

 

Streamline Your Process

Your time is valuable. When you spend anywhere from 30 minutes to three hours sorting through resumes, doing phone interviews, and bringing in candidates, it costs you. When you use a screening mechanism, like a skills test or pre-hire assessment like Sprockets, it narrows down which applicants are a good match for the open position. By narrowing your candidate pool, you save time and money by avoiding lost time that was spent on poor prospects.

 

Optimize Free Marketing Channels

Social media should be used as a platform to not only display fun company information but to advertise your job openings. If you are constantly posting photos of mouth-watering food or fun staff parties, mention these perks in a post and invite interested followers to apply! Facebook offers an option to post jobs. This means you can reach applicants where they spend their time – social media. See how it works.

In the end, taking the time to craft your hiring strategy pays off. By outlining where you’ll find applicants, how you will vet them, and the criteria for a new hire, you will save yourself time and money in the long run. 

Using the four tips in this article, you can be on your way to a great hiring process. Keep them in mind as you craft your hiring strategy and move forward!

 

A woman working in an ice cream shop

How to Let Go of an Employee

How to Let Go of an Employee 1296 642 Sprockets

Letting go of an employee is never an easy task. People depend on their job for an income and to provide for themselves. However, letting go and firing employees is inevitable. This can happen when someone violates company policy, isn’t contributing in a satisfactory manner, or with budget cuts. In order to navigate this tricky task, check out our tried and true tips from industry experts.

 

Outline Policies in Your Employee Handbook

Every business has different expectations for its employees. A fine dining restaurant may require a strict dress code with natural colored hair and no tattoos, whereas &pizza encourages its employees to embrace their look and will even pay for an employee’s tattoo. Outlining policies around expected performance, attire, customer service, anti-harassment, attendance, and outlining fireable offenses are crucial to start a working relationship off on the right foot. These expectations should be made clear for appearance and attendance before an employment offer is extended. When someone is hired, the full employee handbook should be given to them as a hard copy, along with an emailed version.

 

Create a Warning System

It’s important to create a warning system regarding fireable offenses. One example is an employee gets three strikes for missing a shift without notice before getting fired. It’s also important to note any exceptions to this rule. By creating a warning system, employees become aware of the consequences of their actions. In addition, a written warning system levels the playing field for managers who have favorite employees.

 

Document All Problems

Whether you are an at-will employer or not, it doesn’t hurt to document employee problems. These documents come in to play when you are firing an employee. This means recording missed shifts, give away freebies, or simply if someone was hired to be a seasonal employee. It’s important to document and store all of this information in a secure place in your office that isn’t accessible to other employees.

 

Be Professional

Whether you are angry at an employee who stole or releasing a beloved seasonal employee, it is important to remain professional. This entails harnessing your emotions to be to-the-point and be unwavering in your decision. To be courteous to the employee, a professional setting away from their peers is the best way to release an employee. Another courteous tactic is to avoid releasing people on holidays or personal days.

In addition, if it’s an employee you enjoyed having around, consider offering approval to be used as a reference. Or, you could preemptively write them a letter of recommendation.

 

Check with Legal

Most states and companies have an “at-will” employment cause. By definition, this means that an employee can be dismissed by an employer for any reason, or without “just cause” for termination, and without warning, as long as the reason is not illegal (e.g. firing because of the employee’s race, pregnancy status, religion, etc). However, before going through with releasing an employee, check with your company’s legal team, or provided documents. You will need to ensure you are not violating statutory, implied-in-law, or public policy rules. You may need to release an employee at a specific time, have a second person present, or more in case the employee retaliates.

In conclusion, letting go of either a terrible employee or an exceptional one is never easy, even for seasoned managers. Set yourself up for success with outlined policies and expectations for employees. Doing so will ease the pain of letting go of an employee. To ensure you only hire great applicants the first time around, learn more about our Applicant Matching System.

 

Before making your next hire, ensure they are what you are looking for with our guide on How to Identify Action-Oriented Applicants.

Coffee, glasses, and a book

5 Hidden Employee Turnover Costs

5 Hidden Employee Turnover Costs 1200 600 Sprockets

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.

A man and woman smiling in a restaurant

Scheduling Tips for Hourly Employees

Scheduling Tips for Hourly Employees 1200 600 Sprockets

From shifting schedules to staff members who leave mid-shift, scheduling hourly employees can be difficult. However, effectively scheduling staff members has a large, positive impact on employee engagement and retention. In fact, 51% of people say they would quit their job for a flexible work schedule.  These are a few of the most important scheduling tips to keep in mind.

 

Determining Flexible vs. Set Schedules

No matter the industry you’re in, hourly workers will have a preference for either a flexible or set weekly schedule. For example, learning if someone would rather work M, W, F rather than scheduling them where there are openings will cut back on the number of days they are a no-show or late to work.

 

Guaranteed Hour Allocations

One of the biggest complaints from hourly employees is unsteady income. In fact, a JP Morgan Chase study showed that 55% of people report experiencing income change of 30% or more each month, most of it driven by inconsistent hours at their primary job. Offering guaranteed hours each week (or pay period) increases employee engagement and retention. When people aren’t worried about if they’re going to have enough money or what their next paycheck will be, they are able to focus more on their tasks at hand. 

While this scheduling tip may seem intimidating to implement, the number of hours people truly want may surprise you. Someone who works at your location as their primary job may want a guaranteed 30-40 hours. On the other hand, 17% of hourly employees hold a second job. These employees may only want 5-10 or 10-20 hours.  Knowing the hours someone wants to work not only helps with initial scheduling, but also with filling extra shifts that may come up.

 

Noting Shift Preferences

When you hire someone, it is important to ask their shift preferences. If you have morning, afternoon, and evening shifts, finding people who prefer each one is important! It ensures you will have people who will retain longer and will be able to show up for the shifts they are assigned.

Scheduling Preference Questions for New Hires
  • How many hours do you prefer to work each week?
  • How many hours do you prefer to work each day (single shift or double shift)?
  • Which days of the week do you prefer to work?
  • How far in advance do you need a schedule?
  • Which shift(s) work best for you on a consistent basis (morning/afternoon/evening)?
Scheduling Preference Questions for Current Employees

Ask all the same questions mentioned above and the following questions.

  • What do you currently like about your schedule?
  • What do you wish was different about your schedule?
  • Do you have any feedback on our scheduling practices?

 

Posting Shifts in Advance

Whether you offer set or flexible schedules, posting shifts in advance is important. If someone isn’t available on the date they are scheduled, giving them enough time to get it covered is needed. This cuts down on employee absences and being late.

The magic number of posting a schedule is two weeks. However, this step usually comes after nailing down the information from the tips above. When you have enough information about when, how often, and what shift people like to be scheduled, it streamlines the scheduling process moving forward.

In conclusion, taking a step back to look at your scheduling practices and implementing a few of these scheduling tips will increase employee retention and attendance. Plus, by promising potential employees a schedule in advance, a minimum number of hours, and preferred shift times, you will be able to attract more candidates than your competitors.


Be sure to check out our Applicant Matching System to learn how we match applicants against your current employees to streamline your hiring process. We’ll ensure you only hire dependable people, reducing employee turnover costs.

 

A man and woman calculating employee turnover

How to Calculate Employee Turnover

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Employee turnover is a constant, costly occurrence that plagues companies with hourly employees. In fact, an average of 70% of hourly employees turn over each year. Do you know what your employee turnover is? Luckily, this guide will teach you why it’s important and how to calculate employee turnover.

Let’s begin with why employee turnover is crucial to understand. Replacing lost employees takes time, money, and effort. Each of these factors has a real, noticeable impact on a business. For example, having to replace one hourly employee costs $5,000, on average from lost productivity, on-boarding and training time, recruiting costs, paying referral bonuses and more. Losing a good employee or hiring a bad one also impacts the customer experience, meaning your bad employee can cost you thousands of dollars in lost revenue. Taking time out of your day to sort through resumes, bring candidates in for interviews and training new hires takes precious time away from other business needs. For these reasons, it’s important to benchmark employee turnover to get an overall picture of how employee turnover impacts your business and to better understand solutions that can mitigate turnover.

 

Essential Information to Determine Employee Turnover Percentage

To begin understanding your employee turnover, start with a standard calculation. The standard calculation for employee turnover is defined as a percentage of employees who leave a company during a measured period of time. In order to begin calculating your monthly employee turnover, you’ll need three data points and a defined time period you are measuring. Time periods measured are typically monthly or quarterly. 

  1. Beginning amount of employees
  2. Ending amount of employees
  3. Number of employees who left

To get these numbers, simply record how many employees you have at the beginning of the time period. Throughout the time period, record how many employees leave. At the end of the set time period, record the final count of employees.

 

Employee Turnover Factors

As you go through recording and benchmarking your employee turnover, there are a few factors to take note of. One major detail is which employees are leaving. Is it your top performers? Managers? New hires? Understanding who is leaving is important to understand how to mitigate turnover moving forward. 

The other factor to take into consideration is why employees are leaving. If it’s new hires, maybe the job description didn’t accurately match the job. For managers, they might not feel they have enough room for advancement. Additionally, if your top performers are leaving, maybe they don’t feel the culture is the same as it once was or they don’t have support from management. Understanding why people are leaving is an important step to reducing turnover moving forward and engaging the employees you currently have.

 

The employee turnover equation takes two steps: 

Calculation 1
Calculation for average employee count
Calculation 2

The calculation for employee turnover percentage

To put this into practice, here is an example.

  • Q1 Beginning Employee Count: 26
  • Employees who left during Q1: 18
  • Q1 Ending Employee Count: 20 

 

Calculation 1
A math calculation
Calculation 2

A math calculation

Overall, employee turnover has a major impact on businesses. It impacts the bottom line, time allocation, and morale. To reduce employee turnover, you first must measure it and understand why it’s occurring. From there, Sprockets’ Applicant Matching System can help your business reduce employee turnover, streamline your hiring process, and save money by only hiring great matches for your business the first time around. Learn more about how Sprockets can help.

Plus, check out our blog on Creating an Employee Engagement Plan to retain employees.

A woman working at a restaurant

Building an Employee Referral Program

Building an Employee Referral Program 1920 1080 Sprockets

Want better hires, happier employees, and less open positions? Try employee referrals (and Sprockets). Employee referral programs are proven to hire better cultural fits for a company since they already have something in common with your employees. 

Let’s take a look at how successful referral programs are:

  • New hires sourced via referral programs produce 25% more profit for their companies than new hires sourced via other means.
  • Referred candidates stay longer. After two years, 45% of referrals remain compared to 20% from job boards.
  • 88% of employers said that referrals are the #1 best source for above-average applicants.
  • Referred candidates are 55% faster to hire than those from other sources.
  • Employees are happier working with people they want to work with.

To get your employee referral program started, check out these tips:

 

Detail Necessary Qualifications

Being a good friend isn’t the only qualification that matters. While it might reflect positively upon someone’s character, there are other factors to take into account. Common qualifications needed are the ability to work the shift being hired for, relative experience, and a good match for the pace of work.

 

Prepare Your People

Give your staff the tools they need to share openings with others. This includes business cards with instructions on applying and entering their name as a referral, or crafting social media posts that are easy for them to share.

 

Outline Payout Guidelines

Determining when a payout will take place is important. While it would be nice for the employee to receive their bonus or reward as soon as their friend gets hired, that’s not the best idea. By outlining when a bonus will be paid out, it incentivizes them to only refer people they are serious about. Most bonuses take place after either 30, 60, or 90 days of employment. This is an indicator that the employee will stick around and has truly been a good hire.

 

List Reward Options

Reward options may range from cash incentives to free food to special days off. Involving your current staff members in choosing which incentive they want to be chosen is a good way for them to get excited about the new program. Once it is initiated, it is important to stick to the set reward as not to show favoritism.

Cash incentives are the most common reward. The amount is often relative to the job being filled. A General Manager position may warrant a higher reward than a cashier position.

At Iron Hill Brewery, they offer $50 after their referral has stayed three months, $100 after six months, and $200 after one year. For management positions, they offer $500 after six months and $1,500 after one year.


Sprockets’ Applicant Matching System takes the shared traits of your top performers to build a Success Profile. From there, all applicants are matched against it. You can easily see who is a good match for your franchise based on their Match Score. Get started with a free account to boost your franchise hiring.

 

Plus, check out this article on the importance of employee engagement.