An important question: How do you come up with a realistic figure for turnover costs in your business? Here's an example,
|A. Annual pay for the position, $18,000B. Annual benefits, taxes and|
insurance cost for the position, $ 5,400C. Total pay, benefits, taxes, insurance (A plus B), $23,400
D. Percent of first year that new employee is unproductive, 25 percentE. Cost of unproductive time (C times D ), $5,850
F. Recruiting costs (such as advertising), $500G. Management cost to recruit, interview, train, supervise new employee (first year hourstimes hourly management rate, $50, $2,500Estimated turnover cost(E plus F plus G)....................$ 8,850
Now imagine if this business had a turnover rate of 20 percent. The employer would have a total replacement cost of $267,100 ($13,355 times 20).
The Washington, DC-based research group included the price of recruiting new applicants, selecting replacements, training new employees, and lost productivity expenses caused by departing staff members and incurred by new employees.
The result pegs the turnover costs at an average of 25 percent of an employee's annual income.
Average Turnover by
|Professional business services||$14,975|