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Understanding Cost

Understanding Cost

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Turnover Cost

Turnover Cost

The cost of employee turnover can be complex to calculate as it is encompassing recruitment costs in addition to cover and onboarding costs. Monitoring the cost of employee turnover is an important task in human resource management. High rates of employee turnover generate increased costs for an organisation. By identifying the cost of turnover, it is possible to subsequently calculate the benefit generated by a turnover reduction.

There are a variety of approaches that can be taken when calculating turnover cost. This calculator considers some important dimension and different organisations may have develop their own metrics. The cost of an in-post employee in the position is important to know and this should include the cost of any associated benefits, this forms the baseline cost for the period. The cost of covering a vacant position can vary dramatically. If the position is covered by a temporary worker this may be calculated as an increased hourly rate, if the workload is instead spread amongst colleagues, then the cost is through reduced levels of productivity. Recruitment and onboarding costs include all their associated costs which will include the time taken for meetings and training. Ramp up costs are incurred as an employee is brought up to speed with the demands of their position, a new starter cannot be expected too immediately be fully productive. The length of the ramp up time will vary with position but is likely to be between 60 and 90 days.

The formula used in the calculation is:

Tunover Cost = (Days to Fill * Position Cover Cost) + Recruitment Cost + Onboarding Cost + (Ramp up Days * (((100 - Productivy Percentage) * Employee Cost per Day) / 100))


Turnover Cost Calculator




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