What does it really cost to replace employees? For many companies, replacing staff seems to be an inevitable part of business operations. But behind every departing employee, there is a cost that is often underestimated. Especially in sectors with a high turnover, such as the hospitality industry, these costs can increase considerably.

‍

What does it cost to replace an employee?

‍

Replacing lower-paid employees costs average 16% of their annual salary. Not only does an organization lose knowledge and experience, the recruitment, training period and loss of productivity also cause considerable expenses.

Below is an overview of the most important cost items:

‍

Recruitment & Selection

Replacing an employee starts with finding a new one. This involves costs for posting vacancies, hiring recruiters or HR staff and conducting job interviews. Time and money that do not directly contribute to your business.

‍

Onboarding & Training

New employees are not immediately productive. They need to be trained, which takes time from colleagues and supervisors. In the first few weeks, the risk of errors is higher and productivity is lower.

‍

Operational Inefficiency

An open position means less capacity. Schedules are becoming more difficult to fill, colleagues are working overtime and temporary workers have to be deployed. This leads to higher costs and sometimes even loss of turnover.

‍

Staff turnover as a vicious cycle

A lot of turnover has an impact on the team. Continuously new faces can change the mood and cause frustration. Customers also notice this, which influences satisfaction and further strengthens turnover.

‍

Indirect Costs

Turnover also affects reputation. Poor service by inexperienced staff can cause brand damage. At the same time, a higher workload means less satisfaction and more absenteeism.

‍

‍

The Hospitality Industry: An Expensive Case

‍

In the Dutch hospitality industry, the annual costs of staff turnover are no less than €1.4 billion. That is 6% of the total turnover. For an average hospitality business, that amounts to €42,000 per year, purely due to turnover or open vacancies.

‍

‍

Effective strategies for retaining staff

‍

Staff turnover is a challenge that almost every organization faces. Fortunately, there are several ways to reduce turnover and keep employees on board longer.

‍

A healthy work culture as a foundation

A positive work culture is essential to retain employees. When people feel valued and heard, they're more likely to stay. This includes providing regular feedback, recognizing performance and offering opportunities for growth.

‍

Strong onboarding and guidance

A good start makes the difference. By effectively onboarding and supervising new employees, they feel at home more quickly and are more productive. This prevents frustration and increases the chances of them staying.

‍

Flexibility in working hours and schedules

Employees are increasingly valuing flexibility. By aligning schedules to their personal situation and offering space for a good work-life balance, you increase satisfaction and reduce the chance of attrition.

‍

Financial flexibility with Pay On Demand

You can take flexibility one step further by also giving employees freedom of choice in their salary. With Pay On-Demand, employees get immediate access to the portion of their salary they've already earned, without waiting for the fixed payment date. This offers them more control over their finances and reduces stress around money matters.
For employers, this means higher employee satisfaction and demonstrably lower turnover. Pay On Demand can result in a 27% reduction in staff turnover. By offering financial flexibility, you are not only investing in the well-being of your team, but also in the stability of your organization.

‍

CashOut brings Pay On Demand to the Netherlands. Do you have questions about Pay On Demand or want to know how CashOut can help your organization?

Let's talk. Work. Cash. Ready.

‍

‍

‍

‍

‍

‍

‍