One sign of an improving economy is that voluntary separations from employment increase. As unemployment rate drops, workers feel more confident that they can find work, so they leave current jobs. The result is increasing turnover for businesses, requiring employers to spend more effort on both recruiting and retaining workers.
Turnover costs are high. The Society for Human Resource Management estimates it costs $3,341 to hire a new employee. For some high-skilled workers, the costs of recruiting a replacement may be as high as two years’ salary. Turnover costs not only include the cost of recruiting new workers but also training and orientation. It also includes the cost of lost business because new workers don’t know how to provide good customer service or accidentally break equipment or products.