• Home
  • Plans
  • Industries
  • Services
    • Accounting Services
    • Quickbooks
    • Income Tax
    • Personal Tax
    • Business Tax
    • Payroll Services
    • Xero
    • Start-Up Services
    • CFO Services
    • Budget and Projections
  • Let’s Start
  • About
  • Client Portal
  • Blog
Filipek & Company, LLCFilipek & Company, LLC

Call Today! (866) 931-0224First Visit is Free of Charge

  • Home
  • Plans
  • Industries
  • Services
    • Accounting Services
    • Quickbooks
    • Income Tax
    • Personal Tax
    • Business Tax
    • Payroll Services
    • Xero
    • Start-Up Services
    • CFO Services
    • Budget and Projections
  • Let’s Start
  • About
  • Client Portal
  • Blog

Employee Turnover Creates High Costs for Small Businesses

Home Business -Accounting & TaxesEmployee Turnover Creates High Costs for Small Businesses
Now Hiring Sign
Photo by Free To Use Sounds on Unsplash

Employee Turnover Creates High Costs for Small Businesses

February 18, 2020 Posted by Stephen Filipek Business -Accounting & Taxes No Comments
Now Hiring Sign

Photo by Free To Use Sounds on Unsplash

When you think of employee turnover, you may think no big deal your company can get someone else to fill the position. In reality, employee turnover is costly for all businesses, especially small businesses.

In fact, “32% of workers are expected to leave their employer within the first year. Turnover is much higher for people who earn the federal minimum wage, with 70% of these employees expected to leave” per CNBC article. The relationship between minimum wage and turnover rates is complicated and presents a number of implications for small businesses.

Employee Turnover Rates and Minimum Wage

CNBC notes, “an analysis of tens of thousands of small businesses reveals that the employee turnover rate is more than double the national average when employees are paid the federal minimum wage of $7.25/hour. With a nationwide movement to raise the minimum wage to $15/hour, the research shows that turnover rates would decline as a result, though with a diminishing impact once wages pass $15.” 

If the “Raise the Wage Act doesn’t pass the Senate, many cities and states are considering raising their own minimum wages” per w.investopedia.com. Going from $7.25/hour to $15/hour is a large step and many small businesses lack the kind of a budget to keep up. Therefore, small businesses need to stay aware of local legislation and find ways to prepare for potential minimum wage hikes now. Businesses focused on cutting costs where they can won’t have to take as big of a hit when minimum wage rises.  

Alternatively, if the minimum wage is increased to $15/hour, then everything else may follow and go up in price; utilities, groceries, fast-food, etc. Is raising the wages the answer, or is it only a band-aid for a larger problem? 

The Effects of Employee Turnover 

Numerous employees leaving an organization creates low morale for the other employees. Balancecareers.com notes the low morale is due to “overworked employees who have had increased workloads and responsibilities due to a lack of an active or trained workforce.” They go on to add how “new employees are not immune. They too may suffer from low morale as they struggle learning new job duties and procedures.”

The burden put on veteran employees to train new employees and help check their work can also lead to more burnout, and in turn, more employees leaving the organization. 

Turnover Autonomy and Management Opportunities

As reported by CNBC, in a recent analysis of why employees leave small businesses the study “found a strong correlation between hourly wage thresholds and the rate of turnover. One of the most important factors when it comes to turnover is job autonomy.” Job autonomy can be offered in a number of ways. It is important to consider it doesn’t always have to include a title change and wage increase. This same articles reports, “small businesses have few management opportunities, but they [can] assign more responsibilities on employees such as managing a project.” 

Small businesses have a lot to consider when fighting the battle of employee turnover. Filipek & Company can assist with businesses with accounting services to identify ways to achieve success without sacrificing their work force. 

Sources:

CNBC.com – 70% of workers are likely to quit at current $7.25 federal minimum wage in ‘brutal’ turnover cycle

Investopedia – Salary Secrets: What is Considered a Big Raise?

The Balance Careers – The Cost of High Employee Turnover

Tags: accountingbusinessemployee retentionemployee turnoverminimum wagesmall business
No Comments
Share
0

About Stephen Filipek

Stephen has 10+ years of experience in corporate accounting, taxation and business consulting that help provide superior results and solutions for his clients. Stephen is a Quick Books ProAdvisor as well as certified by XERO accounting. Stephen’s experience includes the real estate, not-for-profit, health care, technology and manufacturing industries. Stephen is also dedicated to improving the communities in which his clients work and live by providing financial support and the commitment of significant hours of service each year to various local charities.

You also might be interested in

Should You Retire or Continue Working?

Should You Retire or Continue Working?

Jan 15, 2020

The idea of retirement often raises a number of questions,[...]

piggy bank money

What to Do When You Inherit Money

Jul 9, 2020

If an individual left you an inheritance, what would you[...]

casino
Photo by Kvnga on Unsplash

What You Need To Know About Gambling and Your Taxes

Oct 12, 2020

Photo by Kvnga on Unsplash Gambling can be fun when[...]

Leave a Reply

Your email is safe with us.
Cancel Reply

Archives

  • October 2020
  • July 2020
  • May 2020
  • April 2020
  • February 2020
  • January 2020
  • September 2019

Categories

  • Accounting Services
  • Business -Accounting & Taxes
  • News
  • Personal -Accounting & Taxes
  • Uncategorized

Meta

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org
Our consulting services consistently deliver exceptional results! Get in touch with one of our specialists today. Contact Us

Featured Services

  • Start-Up Services
  • Quickbooks
  • Payroll Services
  • Staffing Services
  • CFO Services
  • Xero
  • Client Portal

Contact Information

  • Filipek & Company LLC​
  • 17001 19 Mile Road, Suite 1-B, Clinton Township, MI 48038
  • 866-931-0224
  • 866-370-7408
  • gfilipek@filipekandcompany.com

Social Media

Office Hours

Monday – Appointments Only
Tuesday – 9AM – 5PM
Wednesday – 9AM – 5PM
Thursday – Appointments Only
Friday – 9AM – 5PM
Saturday – Appointments Only
Sunday – Appointments Only

*During Tax Season, which is from January 1 through April 15th, call us at (866) 931-0224

© 2021 · Filipek & Company, LLC. | Macomb County Accountants | Website by Affordable Website Specialists

Prev Next