The pandemic has had a detrimental influence on the health and wellbeing of every individual worldwide, with large numbers of fatalities and a proportional upsurge in mental illness rates. Additional global activities have increased these fears and anxieties. Equally, economic and labor force challenges have suffered due to scenarios related to these events, however the total economic impacts are still being determined and hard to estimate.
This article will explore how job insecurities have added to the increasing costs of turnover for so many businesses in today’s world – locally and globally – and what business owners can do to help mitigate these situations.
So far, they have proven challenging to quantify. Many governments have implemented various initiatives to minimize the virus’ propagation, including lockdowns, mask mandates, and vaccination campaigns. And many employees and business adopted advice to work from home options early on.
As a result, numerous productive industries, from major to small businesses, had been forced to halt operations or alter working environments to accommodate workforce concerns as well as capital loss due to medical and health concerns. This resulted in the temporary layoff of many employees early on, and that lead to the beginning of a two-year run of job insecurities in every workforce across almost every vertical.
It is nearly impossible for most to keep up with ever-changing shifts like this, but the fear and anxiety of job loss is nothing new. Every time we turn around, there’s another way our lives are changing for good or for worse, and those changes effect everything from family life to career goals and job security.
When employees face job uncertainty, their most valuable resources, specifically employment, are jeopardized and further deplete employees’ resources. As a result, most employees choose to withdraw from the stressful situation to safeguard their surviving resources. Changing employment is one option to get out of a job-insecure status.
The other thing the pandemic incited beyond increased career insecurity was a lack of job acknowledgement and worth. Many began to examine their position and if they were being valued. Could they make a lateral move and feel more appreciated? Could they make a career advancement with another company for more pay or better benefits?
What is business turnover?
Turnover is the entire earnings received by a company over time through a business’ sales of goods or services.
Turnover costs companies dearly in terms of dollars spent on recruiting, hiring, and training new employees. Because it doesn’t account for things like discounts or VAT, it’s also known as “income” or “gross revenue.” It might be quarterly, half a year, the completion of the financial year, or the calendar year.
Turnover costs are hard to estimate.
In a business setting, turnover may also mean employee turnover, the number of individuals that leave the company or asset or inventory turnover, which indicates they are being thrown away, sold, or have reached the end of their useful life.
This situation would end in the following consequences:
- It causes loss of productivity while transitioning into roles
- Lost customer relations as they get used to new faces in the workplace
- Higher overhead expenses because more people are needed to be handled the same workloads
- And lower morale due to constant changes in workplace structure.
How has career insecurity exacerbated turnover rates?
Organizations encounter a problem in retaining people as they strive to fulfill their ambitions. The amount of time an employee wishes to stay with a company is called turnover intention. Since intentions are among the most direct predictors of natural behavior, the intention to quit or stay is connected to actual turnover.
Employee turnover is undoubtedly a significant issue that causes employers to be concerned about job insecurity. Career insecurity bridges the gap between employment and unemployment by describing employees’ fear of losing their jobs. That is, they do not feel like sticking around if there was a chance for them to get something better.
Inability to Achieve Goals in the Workplace = Job Insecurity
Each of these unpredictable moments causes a massive re-evaluation of one’s situation and triggers to reactions to job insecurity concerns – flight or fight.
“Perceived inability to sustain desired continuity in a precarious employment scenario” is characterized by job insecurity.
This can be due to two things:
- Firstly, the increasing number of people who have access to information about what’s out there
- Secondly, and more importantly, (and this is where it gets interesting), people are more willing than ever before not only to consider new opportunities but also act on those considerations.
This means that many employees today will decide whether or not they want a new job based solely on whether or not it aligns with their personal goals (which have become increasingly important) rather than whether it aligns with their employer’s goals (which may no longer be as essential).
As a result, employees have unfavorable reactions to such circumstances. On the other hand, job insecurity refers to the widespread fear about the continuing survival of work. When employees are unsatisfied and insecure, it impacts their work environment and, as a result, increases the likelihood of turnover.
Research has shown that career insecurity drives employee dissatisfaction, and individuals who feel job insecurity are more likely to engage in career withdrawal behaviors. This is a significant factor in employee turnover.
Additionally, if employees feel uneasy at work, they are more likely to leave. For example, analytical research has consistently found an inverse relationship between job insecurity and the desire to leave.
How has career insecurity increased costs associated with onboarding and offboarding?
Approximately 40% of companies in the U.S. suffer from understaffing due to career insecurity.
As a result, many businesses have trouble finding and educating new staff for onboarding while their other employees are offboarding. And these are the expenses a business will have to face because of it.
Onboarding is unfortunately not free. Beyond the apparent payroll increase, several costs are associated with recruiting new staff. Companies often spend money on advertising and other marketing efforts to attract candidates during the hiring and onboarding process.
The average business spends approximately $1,500 on a new employee before deeming them to be fully functioning in their new position. Here are some costs to consider if you add more personnel to your company.
On the other hand, offboarding is generally connected to the compensation or perks a company offers when an employee resigns or is terminated. If you are responsible for COBRA, depending on which state, you will have to pay a few dollars each month in benefits administration costs.
Once an employee leaves their job at a company (or is fired), the company still has some expenditures associated with them going, because even if they’re no longer working for you full time, the chances are good that they’ll still be using some resources from their last position (like office supplies).
This means that even if an employee hasn’t officially left yet but is planning on doing so soon enough, and even if they haven’t been fired yet, a company should plan by preparing themselves financially so they won’t get caught off guard when the transition happens later down the line.
Other factors are incidental, like the time required to recover and inventory corporate property or the time invested by a manager or HR representative in performing an exit interview.
How can a small business curb the cost of turnover?
Small businesses are especially vulnerable to these secret cost-sucking turnovers. There are a few ways that the costs of turnover can be hidden, including the following:
Understanding each employee and where they’re coming from or what they’re going through can solve your business’s retention issues. It’s also crucial to understand the challenging hiring scene. It involves being aware of your market position and not falling behind on the critical moments in terms of employee benefits.
While traditional benefits are an excellent starting point, today’s employees expect and will need more to justify living in one area for over a few years requires life-changing perks. And the long-term stability of your company’s turnover rate is highly dependent on understanding this.
However, recruiting includes more than just finding new staff. You must always do things that strengthen your brand and encourage your team to settle with your organization. That implies your staff retention strategies—culture, salary, and benefits—must be spot-on.
Adverse effects of business turnover that could cripple the flow of good business within a company could be avoided with proper handling of workload and people. Even though the pandemic has occurred, and drastic changes have happened these past years, following reasonable procedures could be of immense help during this crisis caused by a high rate of business turnovers.
RESOURCES TO HELP
If you’re a small business owner looking for ways to help you and your staff through a tough business transition or need help with getting your executive team and partners through a tough situation or challenge regarding your business goals and workforce – you may want to reach out to Dr. Jan Hoistad Partners for a Free Discovery Call.
If you need help identifying, quantifying, and creating a plan to mitigate exorbitant costs related to turnover due to job insecurity, reach out to the team at Carefree Bookkeeping for a free consultation today! Call (612) 986-1192 or sign up for a free Discovery Call now.
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