Myths about turnover abound; some say it is inevitable and there is
little that can be done to stop it. Some argue that turnover is a serious
symptom of deeper organizational problems. Still others imply that turnover is
good since an organization need to do periodic housecleaning in order to keep
things neat and tidy.
In fact, turnover is an indication that something is wrong. At a
minimum, the organization and the employee have been mismatched and often the
only thing the organization has to show for it is another costly statistic.
In this era of continuing and increasing labor shortages,
organizations cannot afford the tedious and expensive process of recruiting
applicants, only to have them leave in discontent.
But just how costly is turnover? PAROS has devised this
cost-of-turnover worksheet to determine how turnover affects an
organization's bottom line. You may be surprised.
ESSENTIAL DATA
Employee's classification: |
______________ |
|
Employee's hourly pay rate: |
______________ |
|
Employee's supervisor pay rate: |
______________ |
|
Corporate office staff pay rate: |
______________ |
(may be an average) |
HARD COSTS
Pre-Departure |
|
|
|
Separation processing
|
Hours _____ |
x Wages $_____ |
= $________ |
Vacancy Costs |
|
|
|
Coworker burden
|
Hours _____ |
x Wages $_____ |
= $________ |
Hiring search firm or temp. agency |
Hours _____ |
x Wages $_____ |
= $________ |
Developing advertisement(s)
|
Hours _____ |
x Wages $_____ |
= $________ |
Placing advertisement
|
Hours _____ |
x Wages $_____ |
= $________ |
Selection & Sign-On |
|
|
|
Interviewing |
Hours _____ |
x Wages $_____ |
= $________ |
Reference checking |
Hours _____ |
x Wages $_____ |
= $________ |
Drug testing/psychological testing |
Hours _____ |
x Wages $_____ |
= $________ |
Orientation & on-the-job training |
Hours _____ |
x Wages $_____ |
= $________ |
Total Hard Costs of Turnover
|
|
|
= $________ |
SOFT COSTS
Pre-Departure |
|
|
|
Lost productivity of departing employee
|
Hours _____ |
x Wages $_____ |
= $________ |
Lost productivity of co-workers |
Hours _____ |
x Wages $_____ |
= $________ |
|
Hours _____ |
x Wages $_____ |
= $________ |
Lost productivity of supervisor |
Hours _____ |
x Wages $_____ |
= $________ |
During Vacancy |
|
|
|
Lost productivity of vacant position
|
Hours _____ |
x Wages $_____ |
= $________ |
Lost productivity of supervisor
|
Hours _____ |
x Wages $_____ |
= $________ |
Recruiting administration
|
Hours _____ |
x Wages $_____ |
= $________ |
Selection and Sign-On |
|
|
|
Lost productivity during training
|
Hours _____ |
x Wages $_____ |
= $________ |
Lost productivity of co-workers
|
Hours _____ |
x Wages $_____ |
= $________ |
Lost productivity of supervisor |
Hours _____ |
x Wages $_____ |
= $________ |
Total Soft Costs of Turnover |
|
|
= $________ |
TOTAL COST OF TURNING OVER ONE EMPLOYEE
Hard Costs + Soft Costs |
|
|
|
= $________ |
FORMULA FOR ANNUAL TURNOVER COST
Number of exiting employees ________ x cost of turnover (hard + soft)
$_________
= $________
PAROS Telephone: 202.257.0279 | Email: scott@parosgroup.com
|