How much should I worry when team members resign? Is labour turnover really a serious problem?
While some turnover of the workforce is healthy, high turnover is damaging and expensive to an organisation and often indicates that something is seriously wrong. As a rule of thumb, the direct, indirect and opportunity costs of employee turnover is estimated to be one to three times, and can be as much as ten times, the departing employee’s salary, depending on factors such as the seniority of the position and how quickly a replacement can be found and trained. These costs are largely hidden, but take their toll nevertheless. According to the Australian Institute of Management (AIM), if too many new recruits stay less than three years on average, this is a poor return on investment in recruitment, selection, induction and training. While ’new blood’ means new ideas and new approaches, too much ‘new blood’ is counter-productive and costly. How much labour turnover is healthy? The generally accepted figure is to aim to be in the 25th percentile for your industry in voluntary separations
