Milker in parlor.
June 26, 2019

Labor Turnover Incredibly Expensive

 |  By: Jim Dickrell

In today’s tight labor market, losing an employee can be incredibly disruptive and expensive.

Recruiting, training and incorporating a new employee can cost 150 to 250% of an employee’s annual wage, says Jennifer Bentley, a dairy field specialist with Iowa State University.

Even if that employee is earning just $10 to $12 per hour, the turnover cost of bringing in a new employee can be $37,500 to $45,000 at 150%. At 250%, the turnover cost will well exceed $60,000.

If you have 20 employees and a 10% turnover rate, with just 2 employees leaving each year, the turnover cost for your dairy could be $75,000 to $90,000 per year at a turnover cost of 150%, she says.

So Bentley uses this mantra: “Train people well enough so they can leave; treat them well enough so they don’t want to.”

As part of that, Bentley says it’s important to do a job analysis for each position on your dairy, and then have job descriptions written for each. Also refine your recruitment and selection methods to ensure you are hiring the right people for the right jobs. Then, spend time orienting and on-boarding new hires to ensure they feel comfortable in their new positions and won’t walk off after a week or two.

Labor costs are typically the second higher expense, just behind feed, on a dairy farm, says Bentley. So do everything you can to recruit the right people, and then retain them once you find and hire them.