Turnover Calculator

March 1st, 2008
Some surveys suggest that it can cost an organization between $2,000 and $5,000 to replace a competent employee. One of the main reasons why businesses engage in Employee Surveys is to improve their bottom line by limiting turnover. A certain amount of turnover can actually be healthy for an organization, but too much turnover is simply not worth the overall end cost.

Turnover has a direct impact on employee morale, productivity, and the reputation of your company. Innovative companies across North America focus on job satisfaction. Not only are happy employees more productive and efficient in the tasks they perform, they are less likely to leave an organization.
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The turnover calculator below estimates the total cost of replacing a competent employee earning $9.50 per hour to be $2,549.
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The numeric values below are sample values only and may not necessarily to be interpreted as specific amounts suitable for your organization. We encourage you to replace these values with amounts that you feel are more appropriate for your organization to calculate your total turnover cost per employee. Although some costs are constant, regardless of the hourly pay rate, many costs are variable and increase as the hourly pay rate increases.

Turnover Calculator:

SEPARATION COSTS
Cost of exit interviewer?s time (15 minutes preparation; 30 minute interview and 15-minute follow up @ $18 per hour for the HR Manager = ($18.00)

+Cost of terminating employee?s time (30 minutes @ $12 per hour) = ($6.00)
+Cost of administrative functions related to termination (2 hrs @ $12) = ($24.00)
+Separation pay (1 week @ $380) = ($380.00)
+Increase in unemployment tax (marginal rate increase + add tax) = ($272.00)

VACANCY COSTS
Cost of additional overtime and benefits (20 hours @ $14.25 per hour for 3 weeks)= ($855)
+Cost of additional temporary help (20 hours @ $11 per hour for 2 weeks) = ($440)
-Wages and benefits saved due to vacancy (40 hours @ $9.50 per hour for 3 weeks) = ($1,140)

REPLACEMENT COSTS
Pre-employment administrative expenses (3 hours @ $12) = ($36)
+Cost of attracting applicants (ads, agencies, and staff time) = ($162)
+Cost of entrance interviews (5 interviews x 1 hour x $16) = ($80)
+Testing costs (aptitude, skill drug --1 hour @ $16 + $30) = ($46)
+Staff costs (staff meetings ? one 30-minute meeting with 3 people @ $16 per hr) = ($24)
+Travel and moving expenses (interviewees and new employee) = ($0)
+Post-employment information gathering and dissemination costs (payroll, benefits, policies, and procedures, employee records, 2 hours @ $14 + 2 hours @ $9.50) = ($47)
+Cost of post-employment medical exams = ($75)

TRAINING COSTS
Cost of informational literature (manuals, brochures, policies) = ($10)
+Formal training costs for first 90 days = ($250)
+Informal training costs (OJT, mentoring, socializing ? 1 day at @ $16 per hour + 1 day @ $9.50 per hour) = ($204)

PERFORMANCE DIFFERENTIAL
Differential in performance costs/benefits (salary differential, vacancy lag, learning curve) = ($760)

TOTAL TURNOVER COSTS PER EMPLOYEE..................................$2,549


Survey Data Stream

Cameron Eastman,
President