NEW GAME

Slide 2

Categorized | Resolving Conflict

The Cost of employee turnover


Where there are issues of unresolved conflict in the workplace, organisations

run the high risk of losing valuable employees. Constructive, healthy working

environments are a fundamental necessity to the satisfaction of employees.

The cost it takes to replace an existing employee can run in the hundreds

of thousands. There is the cost of training new staff, paying recruitment

agencies, and interviewing time. Furthermore, time and productivity is

lost as the new recruits get accustomed to a new organisational culture,

leadership style, work ethics, and ‘feel’ of their new workplace. This cost

can vary depending on the size of the organisation and the position of the

employee, but Raytheon Corporation estimates their cost is 150 per cent

of a fully burdened employee.

‘Chronic, unresolved conflict acts as a decisive factor in at least 50% of

departures. Conflict accounts for up to 90% of involuntary departures,

with the possible exception of staff reductions due to downsizing and

restructuring’ (Dana, Daniel, Conflict Resolution, 2001, p. 22).

Companies lose out of the investment made in training their employees

only to have them leave as a result of conflict that can easily be avoided

through an effective conflict management system.

‘No matter what the cause, turnover has a number of undesirable

implications for organisations, including the costs of losing an experienced

worker, recruiting, and re-training a successor (retraining is estimated

to cost 1.5 times the employee’s annual salary), the lower productivity

of a new worker and secondary morale effects on managers, peers and

subordinates’ (Duxbury and Higgins, Work—Life Conflict in Canada in

the New Millennium: A Status Report, 2003).

‘The turnover costs for an employee is anywhere between 75% and 150%

of the annual salary’ (Phillips, D.T., ‘The Price Tag of Turnover’, Personnel

Journal, Dec. 1990, p. 58).

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