A Step-by-Step Guide to Calculate the Cost of TurnoverJuly 22, 2015 | Author: Jen Iliff, VP of Marketing for Novotus
How much money is employee turnover costing your business? Besides loss of knowledge and talent, did you ever think of the hidden fees like training costs or lost productivity of supervisors and co-workers who have to fill the gap while trying to hire someone new? Novotus has developed a tool that can help calculate the high cost of turnover at your company. Employee Turnover refers to the percentage of team members who leave your company and need to be replaced. When an employee resigns or is fired, there are a variety of steps and fees involved with replacing or refilling that position. So, what does turnover have to do with recruiting? Glad you asked. Of course the most direct way to reduce cost associated with turnover is filling the position – fast. Each day you trim in time-to-fill drives cost savings. But delivering a new hire fast is not the only thing that contributes to reducing turnover. Calibrating the recruiting process to incorporate things like assessments, cultural fit, quality components and hiring manager interview training/guidance all help to make sure the new employees you are hiring are equipped to be in it for the long-haul. We’ve helped many clients significantly reduce turnover and our calculator helps identify the true costs which can be used to communicate the value of recruiting and importance of retention to other leaders throughout the organization. Our turnover calculator incorporates over 20 aspects that help better understand both soft and hard dollar costs. Hard dollar costs include administrative, overtime of co-workers, cost of hire and interview/testing fees for prospective employees. Soft dollar costs are harder to measure but include loss of productivity from the departing employee along with his/her co-workers and supervisors during the pre-departure, vacancy, and selection and sign-on processes.