Wise-up Wednesday from Zane Benefits: Employee retention strategies for dentists; real costs of losing an employee
For dental practices to thrive in today’s economy, finding and retaining the best employees is important. This is especially true for dental practices that are competing with other medical clinics for top talent.
Happy employees help dental practices thrive
Frequent voluntary turnover has a negative impact on employee morale, productivity, and company revenue. Recruiting and training a new employee requires staff time and money. According to the Bureau of Labor Statistics, turnover is highest in industries such as trade and utilities, construction, retail, customer service, hospitality, and health care services.
The cost of employee turnover
Studies on the cost of employee turnover are all over the board. Some studies (such as SHMR) predict that every time a business replaces a salaried employee, it costs six to nine months’ salary on average. For a dental hygienist making $60,000 a year, that's $30,000 to $45,000 in recruiting and training expenses.
Others predict the cost is even more, that losing a salaried employee can cost as much as two times their annual salary, especially for a high-earner.
Turnover seems to vary by wage and role of employee. For example, a CAP study found average costs to replace an employee are:
• 16% of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). For example, the cost to replace a $10 per hour receptionist would be $3,328.
• 20% of annual salary for mid-range positions (earning $30,000 to $50,000 a year). For example, the cost to replace a $40k office manager would be $8,000.
• Up to 213% of annual salary for highly educated positions. For example, the cost to replace a $150k dentist would be $320,000.
What makes it so hard to predict the true cost of employee turnover is there are many intangible and often untracked costs associated with employee turnover.
So, what is the real cost of losing an employee?
In a 2013 article on employee retention, Josh Bersin of Bersin by Deloitte outlined factors a business should consider in calculating the "real" cost of losing an employee. These factors include:
• The cost of hiring a new employee, including the advertising, interviewing, screening, and hiring.
• Cost of on-boarding a new person, including training and management time.
• Lost productivity—It may take a new employee one to two years to reach the productivity of an existing person.
• Lost engagement—Other employees who see high turnover tend to disengage and lose productivity.
• Customer service and errors, for example, new employees take longer and are often less adept at solving problems.
• Training cost, for example, over two to three years a business likely invests 10% to 20% or more of an employee's salary in training.
• Cultural impact—Whenever someone leaves, others ask "why?"
One of the reasons the real cost of employee turnover is an unknown is that most companies don't have systems in place to track exit costs, recruiting, interviewing, hiring, orientation and training, lost productivity, potential customer dissatisfaction, reduced or lost business, administrative costs, lost expertise, and more. It takes ways to measure these costs, reporting mechanisms, and collaboration among office managers, HR staff, and owners.
Best practices on employee retention
So, what can you do about employee retention? Zane Benefits recently outlined seven tips for employee retention. These include:
• Benchmark your employee retention rate
• Use proven retention strategies, not guesswork
• Don't assume employees are happy (create a high-feedback environment)
• Implement a health benefits program such as a traditional health plan or defined contribution health benefits
• Provide different benefits for different employees (focusing on the high-value, expensive-to-replace employees)
• Conduct exit interviews
Conclusion
Although there are no hard numbers on how much replacing an employee costs, it is by all estimates a non-negligible number. For a dental practice operating with only a handful of staff, it is far better to develop employee retention strategies than to struggle with the cost of losing an employee.
RECENT WISE-UP WEDNESDAYS:
How much will individual health insurance reimbursement cost your dental practice?
Will retirement of baby boomers shrink the dental industry?
Health benefit options for dental practices in 2016
To learn more about how to recruit and retain happy employees, download the free guide “The 20 Greatest Recruiting & Retention Tips.” Wise-up Wednesday is presented bi-monthly from the experts at Zane Benefits. One Wednesday a month features Human Resource issues, and the other Wednesday discusses health benefits.
