Building a business in sheet metal, HVAC, or any related field is a challenging endeavor. Not only are you contending with the need for skilled workers who have completed training, apprenticeships, or both, but you also face the growing labor shortage across many blue-collar industries.

A lack of skilled employees isn’t the only challenge here. Worker turnover can become exorbitantly expensive, especially when you consider the time and training that goes into creating one skilled HVAC or sheet metal contractor. What is worker turnover costing the industry, and how can companies retain their current crews while paving the way for new workers as well?

Two Types of Employee Turnover

There are two different types of employee turnover — voluntary and involuntary. They are fairly self-explanatory. Voluntary termination occurs when the employee decides to leave on their own terms. The exact details will vary from person to person. Perhaps they have secured a better position or a better salary, or perhaps there is a negative reason for leaving the business behind. Involuntary turnover, on the other hand, occurs when an employee is let go for poor performance, absenteeism, or any number of other reasons related to work performance.

Regardless of the type of turnover, both can have a negative impact on the company. How much does employee turnover really cost?

How Much Does Employee Turnover Cost?

In 2015, the average employee turnover rate for service companies like those in the HVAC industry was 12.5% — and a whopping 70% of those turnovers were voluntary. Studies have found that for entry-level minimum wage employees — those making $8 an hour — it can cost a company up to $5,500 to replace them. On average, an entry-level worker is going to cost between 30-50% of their annual salary to replace. That number only goes up from there. For a high-level executive, it can cost a company 400% or more of that person’s annual earnings to train a suitable replacement.

For large companies, this might seem like a drop in the bucket in the grand scheme of things. But for small businesses, losing a highly trained workforce can be devastating.

Retaining Existing Crews

There will always be a place for bringing in new team members. And while their training can be costly, it’s an expected expense and part of running any business. The best way to avoid fielding the costs of employee turnover is to take steps to help you retain your employees, building a team with an unshakable foundation. HVAC professionals need a variety of skills, both to complete their jobs and to interact professionally with their customers and clients.

There are a lot of ways to retain your existing team, and all of them start with talking to your employees. If you’re trying to retain a team, the best way to do that is to talk to the people that you want to keep on staff. Find out what will convince them to stay and what they want out of their career. While you don’t need to meet every demand or implement every suggestion, it gives you a good idea of what your team wants when they come to work every morning. This might include shifting focus toward sustainability, offering more ongoing training options, improving the company’s collective work/life balance, or simply offering better raises or bonuses during review season.


What Does the Future Hold?

It’s hard to project what the future might hold for the HVAC sector and other service industries, especially in the face of the pandemic and the impact it has had on nearly every sector. One thing that will remain consistent throughout this trying time is the cost of employee turnover. Companies need to take all the necessary steps to retain their existing skilled workforce or be prepared to absorb the cost of training new employees.

Jane Marsh is the Editor-in-Chief of Environment.co. She covers topics related to climate policy, sustainability, renewable energy and more.

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