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5 Things That Are Costing Your Business More Than You Realise

5 Things That Are Costing Your Business More Than You Realise

Absenteeism, low retention rates and accidents can all have a massive effect on your business’s bottom line. But, what are the root causes of these issues and how can we avoid them to ensure we’re not throwing away money?

  • Not training new staff properly

It can often be difficult to allocate resources efficiently to ensure that new staff and apprentices get the support they need. This can be counterproductive in the long-run as this leads to new employees not being adequately trained, meaning they’re making more mistakes and taking more time to complete their work. Some studies estimate that the direct cost of turnover can range from $4,000 per employee to 1.5 time the employee’s salary however, it’s worth noting that employees who leave within their first year could be costing businesses more as the new employee has not yet added enough value to offset the cost of their hiring and initial training. It’s predicted that apprentices and trainees who drop out could cost Australia almost $12 billion over the next decade.

This is especially concerning when we look at the lowered retention rates, especially with new apprentices. Of all apprentices that leave before their contract finishes, 60% do so within the first year and are more likely to cite workplace problems as their reason for leaving, as opposed to personal reasons which are more common with later leavers. Evidently, providing adequate training and support for new staff, though difficult to always accomplish, can be effective in saving your business unnecessary costs as well as reduce employee turnover and general frustration.

  • Not following WHS laws

On a similar note, effective training and support can also minimise workplace incidents and injuries, reducing overall costs to your business. In 2012-13, injuries cost employers in Australia a total of $1.6 billion in direct and indirect costs. Implementing proper WHS practices across the board should assist in this, but care must also be taken to ensure employees are trained in these practices and are given adequate supervision for new tasks.

Following compliance checklists provided by Safe Work Australia and keeping in line with procedures surrounding identifying hazards, assessing risks and consulting workers can result in improved productivity and happy, safe employees that are more likely to stay.

  • Ignoring employee fatigue

Overtime is often an inevitability in order to meet deadlines. However, employee fatigue can cost you much more in the long run. Lack of sleep alone can greatly impair the judgement of workers, increase number of poor decisions and compromise the efficiency of their work. Moreover, it increases the likelihood of accidents, which will cost your business.

  • Lack of workplace wellness initiatives

Mental stress is seen as one of the biggest workplace injuries in Australia, with 7,500 people compensated for work-related mental disorders each year resulting in approximately $480 million paid in compensation. Out of these claims, 20% are due to work related harassment or bullying.

Creating a positive work environment is great for employees and also helps businesses reduce their costs. About 3.2 days per worker are lost to stress-related issues, so minimising these factors can lead to higher productivity and improved staff loyalty. Simple ways to create a more positive work culture is to regularly acknowledge the achievements of employees to ensure they don’t become disengaged. Other aspects such as establishing roles and company values and communicating these to staff can also assist in creating a better work culture.

  • Distractions

You’re never going to get rid of distractions completely, but some are simply too costly to ignore. Research shows that people are 28% more likely to make a mistake after receiving a phone call, and 23% more likely to make a mistake after receiving a text. Working with employees to come up with fair use policies that regulate distractions such as phone use can be highly effective in increasing productivity and reducing business costs.

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