While employee turnover is a natural, perfectly normal occurrence in even the most pleasant, well-run households, high turnover is costly to employers in a number of ways.
Below is an overview of the hard and soft costs associated with employee turnover.
1) Hard Costs of Household Employee Turnover
Employee turnover is a problem that residential employers would do well to pay attention to. According to a 2006 study from the Center for Hospitality Research at Cornell University entitled “The Costs of Employee Turnover: When the Devil Is in the Details,” there are five major cost categories involved with the total cost of replacing a staff member. These categories, which are detailed below and which I have modified for household employment, include pre-departure costs, recruitment costs, selection costs, orientation and training costs, and lost productivity costs.
These costs are incurred after a household employee has given notice that they will be leaving, but before they actually leave the job. Examples include time spent on dealing with change of health insurance forms, change-of-status processing, and severance packages.
In order to fill the vacancy left by a departing household employee, money and time must be spent on activities such as producing and distributing help-wanted advertising and enlisting the help of domestic staffing agencies.
Selection of an individual from an applicant pool can be one of the most expensive components of the replacement process. There’s interviewing, background and reference checking, and possibly travel expenses. If you work with an agency, this will represent perhaps your largest expense. Agencies generally charge a one-time fee of around 20% to 25% of each placed household employee’s first-year salary (for full-time, permanent placements), so the cost of paying an agency commission numerous times for the same position can be substantial.
Orientation and Training Costs:
Even though new employees generally have the skills, abilities, and background required to succeed in their jobs, nearly every new household employee requires at least some training, if only to understand a household’s practices and culture. The main costs for orientation and training involve the time required by other staff members to provide training to the new employee.
Lost Productivity Costs:
In a household environment, turnover hurts productivity in a number of ways. First, there’s the decreased productivity of a soon-to-be-departing employee. Even in the case of good household employees, short-timers are not likely to be as effective as those who will be continuing with the household. Second, all jobs have a learning curve, which can often take more time than expected. Third, there are disruption costs, as new employees often require training from other staff members or from their supervisor to get up to speed.
Of course, the higher level the job, the greater the turnover costs will be. For example, turnover costs will be substantially higher for an Estate Manager than for a Housekeeper.
2) Soft Costs of Household Employee Turnover
Besides the hard costs detailed above, it’s also important to consider the soft costs of employee turnover, such as the following:
Potential Reputational Damage:
“Difficult” employers typically become known among members of the domestic community, which is small. As a result, talented workers and the better domestic agencies may become wary of working with such employers.
Lower Morale Among Continuing Staff Members:
In higher-turnover households, the loss of employees can lead to lower morale among household employees who remain. Most employees value the good relationships that they have with their co-workers. Accordingly, the loss of valued colleagues can lower the spirits of the staff who remain.
Stress of Dealing with Employee Replacement:
For principals and agents, a major cost of household employee turnover is the stress of having to dealing with finding, evaluating, and hiring new staff members. Finding the right person for the position at hand can be a challenging and time-consuming process. Keeping great employees is an excellent way to help maintain your quality of life and peace of mind.
Looking to learn more about today’s best practices for hiring household staff? Take advantage of our special offer below!
Principals, Managers & Assistants – Now you can request a complimentary copy of the newly released book for household employers by Hamptons Employment Agency, Inc. Founder and President, Aleksandra Kardwell…
How to Find, Hire, and Keep the Right Domestic Professionals
The Household Employer’s Guide to Hiring Great Employees Who Will Stay for Years
Request your complimentary copy today by clicking here or on the book image at left.
Or, contact us today for a free, no-obligation, privacy-assured phone consultation. Give us a call at one of our four locations listed below. We look forward to hearing from you regarding your domestic staffing needs.
Hamptons Office: 631-204-1100
New York City Office: 212-810-9828
Boston Office: 617-865-5888
Florida Office: 561-560-0001
Or, use our brief and easy online Staffing Inquiry Form.
We look forward to hearing from you regarding your Household Staffing needs.