Employee turnover: Plan to fend off this profit killer - DVM
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Employee turnover: Plan to fend off this profit killer


The above computation does not consider the sunken cost of money expended on training and continuing education of the employee who resigned. Also consider whether the employee can collect unemployment compensation or not. If she or he can, what is the cost to the practice? The state will assess the employer directly for unemployment claims, and the claim will most certainly impact the employer's rating adversely. Future years of unemployment tax payments will increase on the applicable wage base across all employees.

The cost of employee morale

None of the calculations thus far assess the price paid for the negative impact on employee morale due to a co-worker's departure. Anytime a worker resigns or is terminated, other employees must fill the vacancy until someone else is hired. Extended duties and hours have the potential to cause employee stress and resentment.

Whether right or wrong, co-workers often have the perspective that they are the ones most adversely affected when another employee quits. Remaining employees typically work more hours, fill positions that they would not normally work, and then must assist in training and integrating a new employee into the practice family. All of these changes in worker duties and relationships disrupt the practice's balance and harmony.

The previous provides a very conservative figure of employee turnover cost. Many experts claim a down-and-dirty estimate of employee turnover cost can be computed by multiplying the employee's yearly pay times 1.5. A $30,000 annually salaried technician will then cost the practice $45,000 upon resignation.

While this figure appears high, the first computation is quite conservative. The actual costs of turnover likely lies somewhere in between, at about $15,000 overall.

The Bureau of Labor Statistics reports the private sector has suffered a 3.25 percent monthly average turnover rate for the last 18 months. This means, for every 100 employees, 3.25 will leave their current positions each month.

With today's job market opening up, one statistic states there are two available job positions for every new potential employee.

Sue A. Schmidt, EA, is director of Tax & Accounting, Practice Management Consultant with Marsha L. Heinke CPA in Grafton, Ohio.


Source: DVM360 MAGAZINE,
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