The Hidden Cost of Turnover — Let’s make sure we hire the right person from the start!

In my many years as an HR Director in the hospitality industry, we hired and terminated a myriad of employees. Always behind and catching up on our work, it was difficult for me and my HR team to justify to our General Manager, the need to hire additional HR personnel for our department. I felt as though we were “spinning our wheels”, and could never pinpoint the actual “cost per hire”, to argue our need for that extra HR person.

On August 8th, 2016, SHRM (The Society for HR Management) came out with an “Average Cost-per-Hire”, showing how much money is spent in turnover. The cost-per-hire includes all of the time and effort it takes to replace an employee; an astounding average of $4,100.00 per hire.

Hire Correctly from the Start

I recall Department Heads telling me: “I need someone now”, or: “Why is this taking so long; I need staff!” These hiring managers should realize that the cost-per-hire hits directly the Company’s bottom line. They worked so hard in operations to increase revenue, but they did not understand the hidden costs of turnover.

Make sure your hiring managers understand that taking those extra few days in the due diligence process can save your Company money in the long run. Some HR best practices include checking at least three (3) references (not “friend” references, but former employer “supervisor” references), conducting a criminal background check and a drug test. Some employers also conduct credit checks when the position description includes handling money. The most important best practice however, is to make sure every single candidate completes an employment application. Make sure too that this application has the correct “legal language”, and include your “employment at will” statement.

Conduct behavioral based interviews. Past behaviors predict future behaviors… Make sure your interviewing questions are open ended, so that the candidate can effectively communicate situations that have happened in the past, and then evaluate those answers. Take your time… The candidate should be doing most of the talking, not you!

We offer “Interviewing Skills Training” to help companies stay out of trouble. Check out our earlier blog regarding what questions not to ask! Our goal is to keep companies stay out of trouble… Call us if you need guidance or consultation on how to reduce your turnover, and hire correctly from the start.