Study Finds Median Cost to Replace a Worker in Southeast Michigan Ranges from $6,000-$30,000

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Employee turnover costs Southeast Michigan businesses between $6,000-$30,000 in lost revenue and productivity, according to a survey released by Southeast Michigan Works! Agencies representing Genesee, Hillsdale, Huron, Jackson, Lapeer, Lenawee, Livingston, Macomb, Monroe, Oakland, Saint Clair, Sanilac, Shiawassee, Tuscola, Washtenaw, and Wayne Counties. In total, 612 employer survey responses were collected from across the Southeast Michigan region to help improve employee retention resources.

Turnover has a significant financial impact on Southeast Michigan businesses of all sizes and industries, with a median cost in lost revenue and productivity, coupled with the costs to find, hire and train a new employee, reaching $6,000 to $30,000 per person.

“We commissioned this study in direct response to meet the needs of our employers,” said William Sleight, Director of Michigan Works! Southeast. “With a record low jobless rate of 4.0% in the state, our employers are looking to us to help them recruit and retain talent. We realized that we needed to find out why employees are leaving before we could effectively respond to their needs,” said Sleight.

“The results of this study are invaluable to businesses throughout our region as this information is not tracked or reported by federal, state or other local entities,” SEMCA Michigan Works! Chief Executive officer Gregory Pitoniak said. “It provides a picture of the challenges and opportunities employers face in our region and is intended to help our Michigan Works! team better serve employers trying to reduce employee turnover.”

Key information on why employees leave organizations and the potential gaps that exist in the development of career pathways for those with barriers to employment were part of the study of southeast businesses. It was conducted by the Workforce Intelligence Network for Southeast Michigan (WIN), on behalf of the region’s six Michigan Works! Agencies, Detroit Employment Solutions CorporationGST Michigan Works!Michigan Works! Macomb/St. ClairMichigan Works! Southeast, Oakland County Michigan Works!, and SEMCA Michigan Works!

The study also identified steps the companies are taking to improve employee satisfaction and reduce turnover. Other key Southeast Michigan findings include:

  • The highest rate of turnover are entry-level, hourly positions. But even occupations in which workers tend to remain with a company for a long-time face challenges keeping jobs filled.
  • The most common reason cited for employee turnover is a desire for higher pay or benefits, closely followed by transportation, childcare and other personal issues. Other reasons include advancement opportunities, new career paths and poaching.
  • Competition for a shrinking talent pool in Southeast Michigan is driving changes in the retention strategies for many local employers. Facing fierce competition, they are experimenting with changes in pay, benefits and other workplace features to attract and retain talent.

“In today’s tight labor market in Southeast Michigan, hiring and retaining quality workers is a top priority for virtually every organization,” said Jennifer Llewellyn, manager of Oakland County Michigan Works!  “This study validates many of their concerns with turnover and, more importantly, helps identify the retention strategies that are working for them. Everyone can benefit from these best practices.”

Michigan Works! Agencies are encouraging businesses to participate in the Business Resource Network (BRN) program, designed to help workers at all levels overcome a range of challenges and achieve their full potential on the job. Success coaches meet with employees privately to connect them with programs and services to address issues related to dependable transportation, affordable childcare, financial stability, medical coverage, affordable senior care and other issues.   

“The goal of the Business Resource Network is to provide companies in Southeast Michigan that struggle with employee turnover with resources to help them address some of their teams’ most pressing needs,” Llewellyn said. “We are actively recruiting companies to join the program now.”

About Southeast Michigan Workforce Agency Council (SEMWAC):

Southeast Michigan Workforce Agency Council (SEMWAC) was created to provide a forum where Michigan Works Agencies in the region can share information and best practices, partner on regional workforce initiatives, identify opportunities for alignment, and coordinate efforts to best serve the needs of this broad and diverse region. SEMWAC’s mission is to bring MWAs and their business, economic and educational partners together to secure resources and collaborate on projects to successfully address critical workforce issues as a region.

About the Workforce Intelligence Network:

The Workforce Intelligence Network for Southeast Michigan (WIN) helps cultivate a cohesive talent system by facilitating data-driven workforce solutions to ensure responsiveness to changing labor market demands. WIN is a partnership of 10 community colleges and six Michigan Works! Agencies in southeast Michigan. It specializes in fostering collaboration among talent partners, including workforce development, community colleges, four-year post-secondary institutions, K-12 schools, economic development organizations, government, community-based organizations, employers and others.

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