U.S. Department of Labor -- CFBCI -- Cost-of-Turnover Worksheet

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November 5, 2008 DOL Home > CFBCI > Business Partnerships > Turnover Worksheet

Cost-of-Turnover Worksheet

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* *Administrative time*	*Hours _____*	*x Wages $_____*	*= $________*
*Vacancy Costs*
*Coworker burden* *Overtime; Added shifts*	*Hours _____*	*x Wages $_____*	*= $________*
Hiring search firm or temp. agency	*Hours _____*	*x Wages $_____*	*= $________*
Developing advertisement(s) Administrative time	*Hours _____*	*x Wages $_____*	*= $________*
Placing advertisement Cost of advertising space(s)	*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 Exiting employee performance at 50%-75%	*Hours _____*	*x Wages $_____*	*= $________*
Lost productivity of co-workers	*Hours _____*	*x Wages $_____*	*= $________*
Increased time discussing departure and organizational conditions Increased work load for employees	*Hours _____*	*x Wages $_____*	*= $________*
Lost productivity of supervisor	*Hours _____*	*x Wages $_____*	*= $________*
*During Vacancy*
Lost productivity of vacant position Overtime Added shifts	*Hours _____*	*x Wages $_____*	*= $________*
Lost productivity of supervisor Time spent filling in	*Hours _____*	*x Wages $_____*	*= $________*
Recruiting administration Supervisor's time with Schedule changes/overtime	*Hours _____*	*x Wages $_____*	*= $________*
*Selection and Sign-On*
Lost productivity during training Replacement requires Support/direction	*Hours _____*	*x Wages $_____*	*= $________*
Lost productivity of co-workers Existing employees distracted	*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