The Cost of Employee Turnover: Comparison based on job complexity

Cost Category

Low ⁽¹⁾

High ⁽¹⁾

Pre-Departure Total ⁽²⁾

$   202.92

$   967.83

Recruitment ⁽³⁾

     559.53

  1,144.93

Selection ⁽⁴⁾

  1,543.40

  1,427.28

Orientation and Training ⁽⁵⁾

     572.33

     861.69

Productivity Loss ⁽⁶⁾ 

  3,297.51

  7,326.90

Total Turnover Cost

$5,693.89

$9,932.05

⁽¹⁾ Mean Cost

⁽²⁾ Costs incurred after an employee has given notice, but before that person actually leaves the job. Ex. Preparing for and conducting exit interviews, administrative activities such as filing, etc.

⁽³⁾ Direct costs associated with promotional materials, advertising, and recruiting sources. Time spent reviewing resumes, and similar expenses etc.

⁽⁴⁾ Cost involved in identifying the most suitable candidate such as interviewing, background and reference checks, travel expenses and soft costs etc.

⁽⁵⁾ The primary costs associated with orientation and training of the new employee and those who are involved. Traditionally, the training time is badly underestimated.

⁽⁶⁾ Lost productivity accounts for the largest percentage of the total costs, up to 70 percent in some cases. Turnover hurts productivity in four ways: 1. Regardless of commitment, short timers are not likely to be as effective as employees who are continuing with the firm; 2. The learning curve for all jobs, which often is longer that many practitioners acknowledge; 3. There are also significant disruption costs, as new employees often need assistance from peers and supervisors, which detracts from their own productivity; and 4. There may be an opportunity cost associated with the vacancy, typically in the form of lost revenues or sales.

From: CHR Reports, Vol 6, No. 15, December 2006

The Cost of Employee Turnover: When the Devil Is in the Details. Tracey and Hinkin