What is Employee Turnover Costing Your Bottom-line?
Not sure to what extent turnover is a problem for your organization, most business leaders and managers may not be keenly aware of what turnover is costing their organization. We recommend companies add a line item on their P&Ls for “Turnover Cost” to make everyone aware of the impact turnover is having their profitability. Knowing how big of a problem one has goes a long way towards helping you solve it. Most owners/managers know that employee turnover is costly, but few have ever put the pencil to it, because they are not sure what costs to include. Below is a helpful guide to help you determine your actual cost of employee turnover. When you are done, ask yourself what we should be willing to invest to reduce this expense. If you have a $100,000 problem and testing will reduce it by 30 – 50%, doesn’t it make sense to invest $35 – $199 per applicant to recoup $3,625 – $10,000 or more per employee? Testing represents one of the best Returns on Investments (ROI) a company can make.
High turnover costs are not isolated to big business. A small business paying an employee an hourly wage as low as $7.25 per hour incurs the minimum cost of $3,625.00 (25% x $14,500.00) every time an employee leave voluntarily or involuntarily. Salaried employee turnover costs range from 1.5 times annual salary to upwards of 14 times annual salary.