21 Oct The High Cost of Turnover
Turnover issues can affect your company’s profitability, customer loyalty, sales, productivity, and employee morale. Below are examples of turnover costs from some reliable sources:
- 1/3 of a new hire’s annual salary or wage Department of Labor
- Nonprofessional position – 1.5 times the person’s annual salary
Professional position – 2.4 times the person’s annual salary Rutgers University –
- $500 for a fast food employee HR Focus
§ $3,000 – 5,000 to replace a truck driver HR Focus · $2,000 teller position Credit Union Magazine
- 38% of an employee’s annual salary U.S. Chamber of Commerce (average for all jobs)
There are many ways to calculate turnover cost. For example, one St. Louis photocopier company figures their first year cost to hire and train a new repair person is in excess of $63,000. Their turnover cost figure includes these tangible and intangible expenses.
Tangible Costs(Easily identified)
Advertising cost for open position
Recruiting agency fee
Travel expense
Interviewer (s) time – First interview
Interviewer (s) time – Second interview
Training cost for new hire
Relocation expense
Temp-to-permanent fee
Hiring bonus
Exit interview cost
Administration costs for termination
Severance/separation costs
Unemployment compensation
Intangible Costs(More difficult to assign a cost figure)
New employee productivity costs associated with the learning curve
Management time that could have been used elsewhere
Loss productivity for existing employees who are filling in for the open position
Employees stress & conflict while the position is open
Customer needs not being met
Missed business opportunities
John Bishop
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