Have you ever been curious about how much your organization spends on employee turnover? The cost can be difficult to determine, but what we’ve found is that it’s worth the effort to undersatnd and almost always more expensive than assumed.
While most organizations are aware of the costs associated with advertising and training to bring in new talent, there are many other factors and expenses that need to be accounted for as wel, and they add up quickly. In fact, most research indicates that replacing an entry-level position costs a company over $3,000! Here is a brief list of factors that can impact the true cost of employee turnover and contribute to that high turnover cost:
- Administrative time required to transition old employee out of organization.
- Advertising, interviewing, and hiring time and expenses.
- Loss of engagement and energy among other employees.
- Training expenses and time required by a higher-level employee.
- Loss of productivity as new employee becomes familiarized with job (can take 1-2 years).
- Negative impact on culture.
Tracking these costs in order to understand exactly how much your organization spends on turnover per employee can be valuable, but also probably very time consuming and even impossible depending on what systems are already in place for tracking softer expenses. In order to help organizations realize how much they might be spending on employee or student turnover, we developed two calculators that can provide rough cost estimates based on just a little bit of information about the organization.
So how do they work? Both calculators take general information regarding population and annual turnover/attrition rates and apply it to an algorithm. The algorithm takes the findings of different studies and calculates an average cost per employee or student and a yearly cost for the organization. If you’d like to learn more about the research behind the calculators, check out the links at the bottom of each calculator page.
Want to see how much your organization is spending? Check out the calculators and try playing with the numbers! Let us know what you find out; the results might surprise you!