Retail sector loses 673 million pounds replacing staff

Labour turnover cost retailers 673 million pounds in 2013, according to a new report

from Oxford Economics commissioned by income protection company Unum.

The report ‘The Cost of Brain Drain’ discussing the financial impact of staff turnover, also noted that the loss of an employee earning 25,000 pounds a year or more carries an average financial impact of 20,113 pounds a year for retailers in replacing them.

This was attributed to the cost of lost output and logistical costs or recruiting and absorbing a new worker. For instance the report states that retailers spend around 16,240 pounds a year on training a new employee to get them up to the standard expected of them, which the report classes as the “optimal productivity” of a worker.

In addition, the Oxford Economics also found that logistical costs of finding a new employee to replace departing staff can result in the retail business spending on average 3,874 pounds on “logistical costs”, which includes the cost of advertising, using a recruitment agency, employing temporary workers, as well as the cost of interviewing and inducting a new employee.

Peter O’Donnell, CEO at Unum said: “In this difficult financial climate, organisations of all sizes are looking to keep costs as low as possible, including the significant expense of replacing members of staff who choose to leave. The key to managing costs is understanding them.

“The most important step organisations should take to reduce these turnover costs is to do everything possible to retain and develop good staff. Raising salaries isn’t always an option, with many companies facing cutbacks and pay freezes in the current climate.”

O’Donnell added: “People stay with companies that demonstrate they value – and care for – their employees.”