What Is Employee Turnover Costing Your Agency?
Author: Shidiah Clark
Published: April 22, 2019
One of the biggest challenges residential service agencies face is finding and keeping good employees and host home providers to provide the excellent care their clients deserve, expect, and are promised when choosing to accept services. There are many reasons why this common struggle plagues a majority of agencies, and even more ways that it holds them back from growing, achieving their goals, and making the impact on their community that they desire. If this is not a struggle for your agency, congratulations - you are very lucky! I encourage you to still read on as your clients, teams, and bottom line may benefit from a fresh perspective.
Allow me to share a story with you about one host home provider in particular (we’ll call her “Stacy”). Stacy’s home had a Inter-Disciplinary Team that had such high turnover that there was a new case manager every six weeks or so for over six months. One case manager in particular (we’ll call her “Tess”) seemed like she would be the one to stick around - she was knowledgeable, passionate, resourceful, and experienced, even though she was young. Tess inherited a somewhat difficult caseload, and Stacy’s home in particular was experiencing some unusual chaos when Tess came onboard. I like to speculate that Tess was gifted Stacy’s home because of some of the challenges they were experiencing; the case manager before Tess completely dropped the ball with the situation and decided to hand it off to some unsuspecting soul after Stacy escalated the situation to management. Tess did what she could with this particular home, but ended up lasting less than a month in the position. Interestingly enough, even though Tess really did have the skill set and personality for this line of work and was excited at first to be in her new position, she had suddenly left to pursue a different degree and line of work. The CCB she worked for said that is common in their company.
“But why is this common?”, I asked myself. Host Home Providers, Program Managers, and Clients experience extreme frustration with the revolving door which always result in increased home visits (one for every new case manager). Each home visit means training the new case manager and getting them up to speed on all the dynamics that encapsulate an entire person (receiving services) that they weren’t able to do on their own by reading the case paperwork. This also causes a lot of anxiety and disruption for the client, which most people other than the provider(s) (and housemates) don’t realize because they aren’t there to experience it. It’s very overwhelming for everyone involved. I suspected Tess didn’t leave just because she “wanted to pursue her degree”. When this happens, there is always an underlying issue that most agencies are unaware of.
Fast forward to today: after catching up with another agency owner, I learned he has been extremely spread thin because of so much turnover (5 employees in the last couple of weeks!). He has had to perform all of his regular duties to keep the company functioning, as well as cover all of the workload left vacant while trying to find replacements. Overwhelm and burnout are extremely real , and affect everyone including executives to clients in more ways than most can wrap their heads around.
While there is SO much to be said about why the overwhelm and burnout cause high turnover, what I’d like to focus on here is how much it is costing your agency. I used a few online resources to calculate the costs associated with replacing employees and contractors, and even with using conservative numbers for all the variables (i.e. hourly wage, time it takes to replace and train, etc.), the price tag of shiny new employees is surprising. My calculations take factors such as pre-departure and vacancy costs, loss of productivity (of the individual and team), orientation and training, administrative and hiring tasks, as wells as other costs such as ads for job postings, background checks, etc. (If you would like the worksheet I’ve created, you can find it here). My findings were jaw-dropping: a full-time program manager earning $15.00/hour can cost an average of $17,945 to replace. That’s more than half their yearly earnings - that number is shocking, and you should find it completely unacceptable!
Don’t believe me? In a recent article examining turnover statistics from reflektive.com, two studies prove just how expensive turnover can get.
“A report from the Center for American Progress, which studied 11 research papers published over the course of 15 years, found that turnover can cost organizations anywhere from 16% to 213% of the lost employee’s salary. 16% is the typical cost of turnover for positions earning less than $30,000 annually, while “very highly paid jobs and those at the senior or executive levels tend to have disproportionately high turnover costs” ranging up to 213%. For example, if a highly-trained employee was making $150,000 annually, the cost for the organization to replace that employee could be as high as $319,500. Another study, from the Society for Human Resource Management, found that companies typically spend 6-9 months of an employee’s salary to hire and train their replacement. Josh Bersin, a leading researcher on human resources and talent management, says that the cost of replacing an employee ranges from tens of thousands of dollars up to 1.5-2 times their annual salary. Also, it can take up to two full years for the new hire to be as productive as their predecessor. Why is employee turnover so costly? Bersin explains that employees are “appreciating assets. The longer we stay with an organization, the more productive we get – we learn the systems, we learn the products, and we learn how to work together.” And it’s not just the outgoing employee’s lost experience and productivity, it’s the costs of recruiting, hiring, onboarding, and training the new employee. Turnover can also impact engagement, morale, and company culture. People begin to question why employees are leaving, and this can have a domino effect where other employees head for the door as well.”
Contractors are less expensive to replace, but their turnover affects way more than just the company’s bottom line. My conservative calculations figure that it costs about 15% of a providers annual salary to replace them. But for host home providers, it's important to also consider the non-monetary costs of the issues that arise from a temporary and/or new placement (i.e. disruptions in day program, work, medical appointments/procedures, and other activities schedules/attendance; disruptions in transportation to/from day program, friends/family, and social activities; increased stress on participants leading to heightened anxiety & behaviors; lost or damaged items/property during a move; increased liability from injuries during moving activities; more program manager hands-on time with training new providers and transitioning clients, taking away from other important tasks), just to name a few. Those aspects are difficult to put a price tag on, and can cause disruption across the board for many positions - most importantly, the person accepting services.
We all know that transitions are inevitable, but how many of them can be averted? How many employees and providers can be retained by being proactive in preventing turnover? How much money could the company save by being more proactive to reduce the turnover? And how would it increase productivity across the company?
Host Home Helpers recognizes the vicious cycle created by the revolving door of employees and providers and the many issues that stem from it. We understand the importance of stability and longevity of service for both your teams and your participants. We have helped companies shrink their retention rates from 50-60% down to less than 10%, saving them thousands of dollars and hundreds of hours of lost productivity.
If your agency is ready to uncover what’s causing your turnover so you can save money, improve productivity, enhance company culture, and raise your bottom line, reach out to us. We have the tools and strategies to realize the agency growth and community impact you’ve craved since you first opened your doors for business.
