Cost of turnover

The impact of turnover cannot be determined if it is not measured and costed. When considering the cost of turnover it is important to consider the resources that go into attracting, recruiting and training the person to a level at which they are competent in the industry as well as considering the effect on the business and employees when that person leaves.

Calculating the cost of turnover

Calculating the cost of turnover to a plant and the industry is difficult given that many of the costs are indirect. Some estimate the cost to be a minimum of $5,000 per employee however most would comment that this is a very low estimation. Many estimate it to be as high as 50-70% of the annual salary of the employee.

In a recent study, plants reported their turnover rates to range from 37-90%. Given these figures the turnover related bill for the average plant ranges from $650,000 to $1.3 million per year.

Costs associated with turnover include:

• Input
  • Training - on the job and external
  • Induction costs
  • Medical
  • Kit, PPE
  • Advertising, agency costs
  • Wages, super , tax, workers compensation
    
  • Resources and time
• Effect when employee leaves
  • Decreased skill
  • Decreased production, quality
  • Negative impact on safety culture
  • Damage to reputation
  • Replacement costs
  • HR personnel always recruiting rather than focus on business
  • Negative impact on those who stay: morale, training, rotation, annual leave, car pool
  • Increased stress and workload for supervisors
  • Increased turnover and absenteeism