The True Cost of Employee Turnover for a Property Management Business: Impact and How to Minimize It
In addition to securing short-term rental protection with insurance and guest screening from a reputable provider like Safely, many property owners may be on the lookout for a reliable property manager. But even with property management software, individuals and companies that juggle several short-term vacation rentals might have trouble keeping up with the revolving door of guests.
Seamless management that gives property owners peace of mind is a major selling point, but when the businesses that provide these services suffer employee turnover, it impacts their ability to ensure client satisfaction.
Let’s explore the full impact of property management employee turnover and how you can minimize it within your property management organization.
Costs and Losses
Before you determine how to reduce employee turnover, it’s important to understand the scope of potential losses if you fail to do so.
According to the Society for Human Resource Management (SHRM), it could cost as much as three to four times an outgoing employee’s salary to fill their position. That includes hard costs like recruitment, hiring, offering competitive pay and benefits, and onboarding processes, as well as soft costs like loss of productivity, employee burnout, and loss of clients and reputation.
Recruiting and Onboarding
Out-of-pocket costs for property management employee turnover are the easiest to calculate.
Your expenses could start with the processes related to the outgoing employee, such as exit interviews, eliminating permissions and access, and collecting and refurbishing electronic equipment for use by other employees. Depending on the type of turnover, you may also be on the hook for severance pay, managing an unemployment claim, or even handling legal fees.
From there, you’ll have to pay the costs for recruiting, regardless of whether you hire an outside company to manage the task or if your in-house HR handles it. Between job postings, screening, and interviews, costs can quickly add up. Additionally, you may have to increase salary and benefits to compete in the current market.
Once you hire, the onboarding process begins, and it could include a range of costly resources devoted to processing and training a new employee.
Downtime and a Loss of Productivity
In addition to hard costs, you’ll also experience losses related to downtime and its impact on productivity.
Getting your remaining staff up to speed on client accounts takes time. And the longer your remaining employees have to shoulder the added workload, the more likely it is they’ll start to suffer from burnout, further impacting performance and quality of work or even leading to additional turnover.
Diminished work capacity might impact not only the clients of a lost employee but also pre-existing accounts for remaining workers, not to mention any new accounts you pick up in the interim.
Loss of Clients
One of the most important reasons to formulate strategies regarding how to reduce employee turnover is to avoid giving clients cause to leave you for your competitors. When the quality of work suffers as your remaining employees are spread thin, it’s only natural for clients to notice and become dissatisfied with the service(s) they receive. And though some loyal clients may stick around, things won’t last much longer if they start losing money or receiving negative guest reviews.
Poor Reputation
It’s hard to nail down the value of reputation in the realm of business, but if clients aren’t satisfied and employees are overworked, you not only have to worry about further losses but also negative reviews. If you fail to minimize property management employee turnover, a bad reputation could make it even harder to hire and secure new clients, compounding your problems.
Retaining Employees
When you understand the many costs associated with employee turnover, you’ll start to see how spending up front to retain employees can minimize business interruption and save you money in the long run. As such, hiring the right employees is the first step in effectively providing for client needs.
You also need to make sure you offer adequate incentives for employees to stay. Competitive salaries and benefits are a great place to start when it comes to property management employee satisfaction, but you can also offer perks that modern professionals are looking for. These include things like flexible scheduling, remote work options, continuing education opportunities, pathways to advancement, mentorship, and opportunities to achieve a solid work-life balance.
Safely provides tools that make the lives of independent short-term rental property owners and management companies easier. Contact us today to learn more about our products and services and to request a quote.
