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Acendz International

Acendz Interantional

Knowledge Centre

Assessing Turnover Costs

Numerous international and New Zealand based studies prove that the direct cost of just one unplanned exit falls somewhere between 1.5 times and 4 times the departing employee's salary.

Direct costs associated with ONE person leaving include:

ADMINISTRATION & PEOPLE COSTS

  • Salary / wages of the person who fills in while the position is vacant
  • Exit interview time of employee and Manager
  • Administrative costs in preparing final pay
  • Set up costs of new employee - including payroll, computer /security passwords, identification cards, business cards, telephones, email accounts, credit card accounts, cell phones, cars, pagers
  • Manager's time spent in developing trust and building confidence in the new employee's work
  • Severance / benefits continuation in some cases
  • Personal Grievance costs - representation and settlement
  • Possible loss of customers / clients that the employee may take with them 
  • Disruption to the customer / client base managed by remaining employees
  • Effect on the morale of remaining employees
  • Absenteeism and burnout created by remaining employees having to work harder

 

LOST PRODUCTIVITY COSTS

  • Reduced productivity levels of new employees - productivity is estimated on average to be only at 25% for the first 2-4 weeks, at 50% during weeks 5 - 12 and at 75% during weeks 13 -20
  • Co-workers / supervisory lost productivity while bringing the new employee ‘up to speed'
  • Costs of mistakes by the new employee while working at less than 100% productivity
  • Project delay costs where the departing employee is a critical participant
  • Cost of the Manager having to understand what work remains and how to cover that work until a replacement is sourced
  • Loss of institutional knowledge, skills, contacts and Intellectual Property

 

TRAINING COSTS

  • Investment of training in the departing employee - internal and external
  • Orientation, training and induction of the new employee, their trainer and the materials 
  • Departmental training time and materials
  • Supervisory time in assigning, explaining and reviewing work assignments and output

 

RECRUITMENT COSTS

  • External recruitment and selection costs - typically 15-20% of base salary plus advertising
  • Internal recruiter time - typically from 30 hours to over 100 hours per position
  • Recruitment administration time
  • Travel and / or relocation costs to attract top candidates
  • Selection panel preparation, interview and discussion time
  • Health screens and qualification / educational checks
  • Psychometric assessment - skills, abilities, aptitudes, values and behaviours

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