As someone who’s been in the sales game for a while, I’ve seen firsthand the impact of high turnover on a company. The cost of employee turnover is a significant issue across all industries, but its impact is especially poignant in construction.
With the industry already grappling with a labor shortage, losing skilled workers can have far-reaching consequences that go beyond just the immediate costs of hiring and training replacements – it can cost you your reputation.
Let’s break down why the cost of employee turnover is such a big deal and what you can do about it.
The Direct Costs: More Than Just Recruitment Expenses
When we talk about the cost of employee turnover, many people immediately think about the expense of hiring a replacement. And yes, that’s a big part of it, especially in construction where finding someone with the right skills isn’t always easy.
According to the Society for Human Resource Management, the average cost to replace a worker in the U.S. is around $4,100. But in construction, that number can shoot up quickly once you factor in the specific requirements for each role.
Let’s say you’ve lost a seasoned foreman. Finding someone with the right experience isn’t just about posting a job ad and waiting for the resumes to roll in. You might need to bring in recruiters, which can cost you 20-30% of the new hire’s first-year salary. Then there’s the interview process – time spent out of your day, your team’s day, and before you know it, the costs start piling up.
But hiring is just the beginning. Once you’ve got someone on board, they’re not going to be at full speed right away. Training takes time, and while they’re learning the ropes, they’re not contributing as much as the person who just left.
During this period, other team members often have to cover extra duties, leading to overtime costs and potentially even burnout. And that’s assuming your new hire sticks around – if they don’t, you’re back to square one.
The Sneaky Indirect Cost of Employee Turnover
Here’s where things get even trickier. The direct cost of employee turnover is painful, but the indirect costs can be just as damaging, if not more so. For example, when a team member leaves, it can take weeks or even months to fill their role, leading to project delays and missed deadlines. In an industry where timing is critical, these delays can erode client trust and damage your company’s reputation.
Employee turnover can also disrupt operations in ways that are harder to quantify but equally damaging. When someone leaves, the rest of the team has to pick up the slack. That might work for a little while, but over time, it wears people down. Morale starts to drop, and the cracks start to show. Workers who were once happy and productive start questioning their place in the company. And who can blame them?
If they’re constantly covering for others, with no end in sight, it’s only natural to start looking elsewhere.
This kind of turnover-driven disruption can have a ripple effect throughout the company. Your best employees – those who are already working at full capacity – are now stretched even thinner. And when morale drops, so does productivity. It’s a vicious cycle that can be hard to break out of.
Reputation is a Huge Cost of Employee Turnover
In construction, your reputation is everything. Clients need to know they can count on you to deliver quality work on time, every time.
Consistently high employee turnover can lead to a loss of institutional knowledge, making it difficult to maintain quality and consistency in your work. Project delays become more common, quality control starts to slip, and before you know it, word gets around that your company can’t be trusted to get the job done right.
The construction industry is a small world, and reputation spreads quickly. Once you’ve developed a reputation for being unreliable, it’s tough to reverse that image. Clients start looking elsewhere, your competitive edge erodes, and new business becomes harder to win. This is why retention isn’t just a “nice to have” – it’s a critical part of protecting your business.
Fight the Cost of Employee Turnover by Focusing on Retention
So, what’s the solution? How do you stop the revolving door and start building a team that sticks around? It starts with a commitment to your people. In my years of experience, I’ve seen time and again that the companies with the lowest employee turnover rates are the ones that invest in their employees.
Investing in employee retention is not just about reducing turnover costs; it’s about building a stable, skilled workforce that can drive your company’s success. Offering ongoing training and professional development is one of the most effective ways to retain employees.
When employees see that their company is willing to invest in their growth, they’re more likely to stay. This is especially true in construction, where the skills required are always evolving. Offering regular training opportunities not only keeps your team sharp but also shows them that you’re committed to their long-term success.
When workers feel that their employer is invested in their growth, they are more likely to stay with the company long-term.
Practical Steps to Improve Retention
Improving retention isn’t just about grand gestures; it’s about consistent, everyday actions that make your team feel valued. Here are some practical steps you can take:
#1 Conduct Stay Interviews
Instead of waiting for exit interviews, conduct regular “stay interviews” with your employees. Ask them what’s going well, what could be improved and what might tempt them to leave. This proactive approach can help you address issues before they become reasons for departure.
#2 Offer Career Development
Help your employees map out a clear career path within your company. Provide training, mentorship and opportunities for advancement. When people see a future with your company, they’re more likely to stay.
#3 Promote Work-Life Balance
In an industry known for long hours and demanding schedules, promoting work-life balance can be a game-changer. Whether it’s offering flexible schedules or simply encouraging time off, showing that you value your employees’ well-being can go a long way in retaining talent.
#4 Recognize and Reward Contributions
Regularly acknowledge the hard work and contributions of your team. This doesn’t have to be complicated – sometimes, a simple thank you or a shout-out in a meeting can make all the difference. But also consider more tangible rewards like bonuses, extra vacation days or other perks that show you appreciate their efforts.
#5 Create a Positive Culture
Building a positive company culture where employees feel connected and supported can drastically reduce turnover. Encourage teamwork, open communication and make your workplace a place where people enjoy coming to work every day.
Tyfoom Makes it Easy to Invest in Your People and Improve Your Retention
Companies with engaged employees enjoy 59% less turnover. Tyfoom provides a simple and easy way to connect all employees with leaders every day to improve culture, productivity and employee engagement. Employing science-based techniques and gamification, learners are motivated, engaged and accountable.
Unsurprisingly, employees who have fun at work are more likely to experience high job satisfaction, which in turn boosts creativity, productivity and a willingness to collaborate. Tyfoom helps organizations increase employee job satisfaction by:
#1 Creating Incentivized Goals
Tyfoom’s engagement and TSR scores can be used to incentivize participation and behavior changes when tied to year-end bonus amounts, etc.
#2 Regularly Acknowledging Accomplishments
With Tyfoom, learners can track their progress, view achievements and compare their standing on leaderboards in real time. Managers can also highlight employee achievements with quick company-wide shout-outs through the “messaging” feature.
#3 Keeping Employees in the Loop
Tyfoom takes away the pain and hassle in effectively communicating within an organization. Managers can deliver clear, consistent messages to all employees instantaneously through the Tyfoom app.
#4 Fostering a Creative Workplace
Tyfoom empowers employees to be proactive and creative. With Tyfoom, employees can easily record and submit their own training. Once approved, these videos can be instantly shared company-wide.
Employee Turnover Costs More Than You Think
The cost of employee turnover is more than just the dollars you spend on hiring and training – it’s the projects delayed, the clients lost and the negative impact on team morale. Not to mention the loss of valuable expertise and long-lasting damage to the reputation you’ve worked so hard to build.
But by making retention a priority – through training and a supportive work culture – you can build a team that sticks around, drives your company forward and helps you stay competitive in an ever-changing market.
In this business, the foundation you build today will determine your success tomorrow. Make sure it’s a strong one.
To learn how you can engage your employees and retain top talent, schedule a call to speak with a Tyfoom training consultant today.