In the current low unemployment landscape, finding tech talent is harder than ever before. Even in tech-mecca Silicon Valley, major players like Amazon and Google have an average employee tenure of just one year. The likelihood that you’re able to find skilled, qualified IT professionals in your local area is low – which is why the cost of attrition can quickly have a major impact on your bottom line. While some of the costs associated with turnover can be measured monetarily, others prove more difficult to calculate. In this blog, we’ll cover the true damage that attrition in your IT department can have on your profit margins, plus provide insight on how to cushion the impact on your bottom line.
Breaking Down the True Cost of Attrition
The cost of attrition can range from tens of thousands of dollars to 1.5-2 times an employee’s annual salary. This figure is mainly comprised of the following factors:
– Lost Productivity
When an employee leaves your company, you’ll begin feeling the pain from day one. Even if you have a replacement lined up, they’re subject to a learning curve and need an adjustment period to fully grasp their responsibilities, as well as your organizational processes. It takes time for new team members to understand your business, from daily operation to overarching goals and structure. It can be months, and even years, before a new employee is able to perform at their peak level.
– Lost Knowledge
It’s virtually impossible for employees to transfer all of their knowledge to their successor. If exiting and incoming employees don’t overlap, there’s likely to be little to no information shared at all. While many tech professionals share similar skillsets, knowledge specific to your organization is critical for your talent to succeed. The insight developed from personal experience is invaluable, and often lost during the turnover process.
– Cost of Recruiting, Onboarding, & Training
Recruiting, onboarding, and training costs should come as no surprise to any business leader. These expenses are pivotal for employee retention – 69% of incoming employees are more likely to stay with a company for three years if they experienced great onboarding.
The hidden cost of these processes is the impact they have on managers and other team members who are required to make up any shortfall. As opposed to focusing on their core responsibilities, managers are instead using time to redistribute tasks, recruit the new employee, and integrate them into their team. Furthermore, high-performing employees are often entrusted with training new hires. While this is logical on the surface, it also means that experienced professionals are delegating some of their tasks to another team member, who likely already has a full plate. This cycle causes workload productivity to drop even further.
– Impact on Employee Morale
Consequently, as responsibilities are passed from one employee to the next, often without much direction, it’s easy for your team to become overwhelmed and frustrated. This is accentuated by the fact that an individual, who your employees presumably collaborated with and respected, just left the organization.
Even if the exiting employee is leaving due to factors completely unrelated to your company, losing a co-worker can cause employees to feel bitter, sad, or justified in their negative feelings. The combination of taking on additional work and losing a valued colleague causes productivity, employee morale, and overall confidence to plummet – opening the door for even more potential attrition.
How to Reduce the Cost of Attrition in Your IT Department
The solution to reducing the cost of attrition in your IT department is two-fold. First, it requires a robust employee retention strategy that offers numerous opportunities for advancement, as well as internal support and a compelling company culture. Simply handing out bonuses isn’t enough to keep your employees satisfied on a daily basis. There are countless best-practice retention strategies that you can integrate into your organization, such as starting a mentorship program, developing diversity initiatives, or scheduling one-on-one time for team members and senior management.
Secondly, it’s crucial that you prepare for turnover before your employees even consider looking for the door. A study performed by the Harvard Business Review found that as much as 80% of turnover can be attributed to poor hiring decisions. Instead of rushing the hiring process, and adding even more tasks to your employees’ dockets, partner with an organization that’s proven they can uncover experienced, niche tech professionals, like PTYTECH LLC.
PTYTECH LLC’s experience in the IT industry allows them to find talent in no time, reducing your costs across the board. Plus, if you’re not ready to commit to a candidate, you can work with the PTYTECH LLC team to find a temporary, temporary-to-hire, or contract employee to maintain operations while they find exactly what you’re looking for. These candidates regularly jump into new organizations and roles, ensuring they can seamlessly pick up where your last employee left off.
Don’t let attrition wreak havoc in your IT department. Reach out to learn more about how PTYTECH LLC can augment your bottom line today.
Related Articles
The Critical Tech That Your Organization is Missing & How It’s Hurting You
3 Ways Artificial Intelligence Can Transform Your HR Strategy in the Future
