"The Cost of Employee Turnover" Summary

Employee turnover has been a constant issue, especially in the hospitality industry. It can cause operating expenses to increase, as replacing staff requires hard costs, soft costs, and opportunity costs. All of these additional costs will eventually decrease profitability. The cost of turnover is divided into five steps. First is pre-departure, when the employee gives notices about his/her leave. Then there is recruitment, where the company has costs to do with promotional materials, advertising, and recruiting sources, in order to recruit a new member of the team. After is selection, where time is put into selecting a particular candidate through interviewing, background checks and reference checks. Once the candidate is selected, orientation and training is required to understand a company's particular procedures. Finally, there is productivity loss. In the hospitality industry, it was concluded that the higher the job complexity, the higher the cost of turnover. The amount of people for higher level jobs is smaller than of the people for low skill jobs. However, these higher level candidates are generally more qualified applicants. It was concluded that the cost of turnover is higher for complex jobs in larger hotels which run in high cost of living locations. Finally, the result of employee turnover affects revenue and expenses, which in turn reduces profit. With this issue, companies today can try to design better policies and procedures in recruiting and keeping quality employees.

Ashley Jang, Cathy Tran, Matthew Jiu