High employee turnover is never a good thing. When you factor in just how much it costs to rehire and train replacements, it can become unmanageable very quickly. While some experts estimate these replacement costs to run anywhere from 6-9 months salary, most agree that this estimate is too low.
The Real Costs of Employee Turnover
Employee replacement costs tend to vary based on the type of position. For example, lower level, hourly-paying jobs could cost around 16 percent of the base salary to replace. Whereas, the costs to replace a salaried executive could go as high as 213 percent of the base salary.
Other intangible costs, such as lost productivity, engagement, and cultural impact are harder to track, cost-wise, but must be taken into consideration when evaluating the true cost of employee turnover.
Benefits of Employee Referrals
Stripe co-founder and CEO, Patrick Collison says that “The first ten people you hire are so important because you think each one of those people are going to bring along another ten people.” Studies suggest that Collison got it right.
Not only do employee referrals tend to stay longer, but the referrers stay longer as well. This makes sense. Your employees are most likely to refer candidates that not only have the necessary skills to do the job but also ones that would fit well with the company culture.
Referrers, on the other hand, take a vested interest in the company when they make a referral. In addition, it’s just human nature to enjoy working at a place where you know and like the people around you. Enabling your employees to take part in the hiring process, by making referrals, can help reduce turnover, improve employee retention and greatly impact the quality-of-hire.
Make the Referral Process Quick and Easy
Not only can an employee referral program reduce turnover and hiring costs, but it can improve the quality-of-hire, speed up new hire assimilation rates, and boost workplace morale. With this much power, you want to make sure your referral process is as quick and easy as possible.
This fact makes transitioning from an outdated, manual employee referral program that is difficult and prone to errors to a new modern digital referral platform where employees can make referrals quickly and efficiently a priority for all businesses.
If you want to reduce employee turnover and improve employee retention, initiating or upgrading your current employee referral program should be your first step. EmployUs offers a comprehensive employee referral platform that includes reward management, social referrals capabilities, valuable analytics, marketing automation and more.
Contact EmployUs to learn more about how the right employee referral program can help reduce turnover in your workplace.