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The Hidden Costs of Losing an Employee

00:00AM Jul 30, 2008

Margy Fischer, Farm Journal Machinery Editor

When an employee walks out the door you might as well throw $1,900 out the window. According to Sarah Sanders Smith, a professor of organizational leadership and supervision at Purdue University North Central, the total cost of replacing a $10-per-hour employee really adds up.
"Losing an employee will cost a lot more than many farmers realize,” Sanders says.
The hidden costs of attracting applicants, overtime until the spot is filled, and time in interviewing and training the new employee can be unavoidable. However, there are many concepts you can put into practice that will help minimize employee turnover.
Sanders advocates being proactive about your employment policies.
Post a one-page employment policy, which details any disciplinary policy. This will inform everyone of how situations will be handled before an infraction occurs.

Provide intangible benefits to employees. These can include a turkey dinner for all farm employees at the holidays, actively applying the Golden Rule, honoring time-off requests when it is possible to do so, and being mindful of your tone of voice.

Research what tangible benefits you can offer. Sanders says to think twice before you assume you can't afford the benefits in this category, because health insurance, retirement plans and disability insurance all have the power to decrease turnover.
As for pay, Sanders says there are three types of managers: pay leaders, pay followers and market value.
  • Pay leaders will increase wages to be the highest in the area.
  • Pay followers will gage their wages based on what the neighbors are paying.
  • Those who pay market value, base their pay on what the labor is worth in the business.
She notes that the financial strength of the employer will determine the maximum they can pay.
For More Information on Employee Turnover Costs

You can e-mail Margy Fischer at