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What is turnover costing your company?

Employee turnover varies by industry and geographic location and in order to take effective measures to reduce turnover, first you need to find the price your business pays in lost employees:

Calculating Employee Turnover Cost:

1. A general approach to calculate employee turnover cost is to use 50% to 200% of an employee's annual salary.

2. An accurate method is using the cost of hiring and training a new employee.

3. Total employee turnover cost = Costs of hiring new employees + Costs of training new employees.

Costs for Hiring New Employees:

The cost to your business when hiring new employees includes the following six factors plus 10% for incidentals such as background screening:

1. Advertising opening

2. Bonus signing (if applicable)

3. Relocation pay (if applicable)

4. Interviewing time

5. Travel expenses

6. Pre-employee screening and assessments

Costs of Training New Employees:

• Training materials

• Information Technology

• Employee benefit set up

• Trainers time an average is 50% of total payroll (including benefits) for all employees who leave your company each year.

Costs you may not have considered:

• Continued benefits

• Loss of productivity

• Missed deadlines and shipments

• Loss of organization knowledge

• Lower morale due to overwork

• Learning curve costs

• Client issues due to turnover

• Loss of client relationships

• Disrupted department operations