4 Workplace Money Drains in Business and What You Can Do about Them
California is home to over 4 million small businesses, making it one of the best states for fledgling entrepreneurs. The state’s excellent economic growth, diverse population, and financial hub make it attractive to anyone who wants to make it big.
While the prospects are good, costs can also soar here. It isn’t the cheapest state after all. Entrepreneurs might be able to manage their finances more effectively when they pay attention to workplace money drains.
1. Workplace Injury
Although the cost of workplace injury has been decreasing through the years, it still remains a pocket burner, particularly for fledgling entrepreneurs.
According to the National Safety Council, the average workplace injury is around $1,000 per work. Motor vehicle crashes, which account for the highest lost-time compensation, could cost a whopping $73,559 in claims.
Workplace injuries also have direct and indirect costs. Besides spending on medical care, these health issues could result in absences. Businesses lose over $225 billion each year due to absenteeism alone.
Missing work-days lead to lower productivity, efficiency, and employee satisfaction. All these have costs, too.
Solution: Businesses need to make employee security a priority. They need regular training, proper safety equipment, education, and clear policies. In cases when the injury is because of another party, companies can support the worker in looking for a personal injury lawyer.
The costs of disengagement, which occurs when employees become less participative to the organization, can be staggering.
According to a Gallup survey, the US economy wastes around $350 billion every year to disengagement. Decreased productivity amounts to as much as $10,000 in labor wages.
Meanwhile, a study by PeopleMetrics revealed that highly engaged teams usually sell 20% more than less-engaged ones. Highly profitable businesses have 50% more engaged workers.
Solution: Disengaged employees hurt the business in many ways. Not only do they drain the profit, but they can also become pervasive in no time.
Companies can nip this in the bud by being more employee-centric. Entrepreneurs can re-engage them by providing opportunities for a career path or growht, allowing them to share their ideas, and promoting accountability and transparency, especially in communication and job performance.
Every time an employee leaves, the company is actually bleeding money. In a 2017 report by the Employee Benefits News, a turnover costs the business 33% more on the worker’s annual salary.
Doing simple math, if the employee earns $50,000, then the turnover costs could reach $66,500. If the company has a high attrition rate, this adds up quickly.
Why is it costly? At least two factors increase attrition costs: hiring and training. Attracting new talent, particularly an external applicant, could already increase the spending by at least 18%. On the other hand, training means the employee is less productive and efficient.
Solution: Companies cannot stop employees from leaving. But what they can do is to drive the attrition rate down. They need to learn to retain workers. It begins by matching applicants to the right job. Entrepreneurs can also study the reasons for turnover using data from exit interviews and employee feedback.
The costs of stress are higher than what people expect. The data showed that US businesses lose at least $300 billion a year.
This is because the effect of stress is wide-ranging. It results in absenteeism, lost productivity, and a high turnover rate. Chronic stress can also impact the body, leading to illnesses and healthcare costs.
Solution: Workers feel stress for a variety of reasons. Two of the most common causes are job insecurity and poor work-life balance. Companies can avoid expensive costs, therefore, by focusing on these two issues.
Many business-related expenses are vital for an entrepreneur to succeed. But some can be money-draining despite being unnecessary. By avoiding these four costs, companies have better control over their profits and cash flow while keeping the best talent.