Employee turnover cost can be significant to any company, ultimately hitting squarely on a company’s bottom line.
Estimates for Employee Turnover can range anywhere from 10% of an employee’s annual salary to 150% or more, based on the scope and complexity of a role.
In this week’s blog we help you quantify what your employee turnover is truly costing you. The factors that impact employee turnover cost can significantly vary from one position to another. Where certain expenses may not be applicable at all to the replacement of one position, they may be significant to the replacement of another.
Direct and Indirect Employee Turnover Cost1
(see the accompanying chart with an estimated employee turnover cost for Project Manager)
Direct Employee Wage Cost by Other Employees–
Employee time and wage expense incurred by current or temporary employees involved in the exiting process or required to perform additional duties as a result of the separated employee.
Replacement Employee Acquisition Cost–
Expenses related to the service fees required to assess, interview and promote candidates.
Employee Placement Cost–
Expenses related to any materials, supplies, equipment or uniforms that have to be provided to a new employee.
Lost Productivity Cost by Other Employees-
Lost income from the full or partial days of productivity by any employees involved in the selection, interviewing, onboarding and training of a replacement employee.
Lost Productivity Cost by the Replacement Employee-
Lost income from the number of lost full days while the position is open and the number of lost full or partial days from the replacement employee’s start date until they are fully productive (which could range from a few days to more than a year based on the complexity level of the position).
See next week’s blog on the key strategies and tactics your company can implement to significantly increase employee retention and reduce employee turnover expense.