Does your firm calculate the cost of employee turnover?
In my experience, those firms that are aware of the real cost of turnover make more of an effort to encourage staff to stay. As a percentage of salary, what would an average figure be for your firm?
Many thanks,
Col
www.colbrown.co.uk
From United Kingdom, London
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In my experience, those firms that are aware of the real cost of turnover make more of an effort to encourage staff to stay. As a percentage of salary, what would an average figure be for your firm?
Many thanks,
Col
www.colbrown.co.uk
From United Kingdom, London
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Cost of Employee Turnover
The figures for the cost of employee turnover do vary. For managers and professionals, you can anticipate them being in excess of a year's salary for a good employee. In some cases, 150% of salary is a realistic figure. For manual workers, 50% of salary might be a reasonable estimate. In the UK, very few companies take the trouble to calculate the real cost of turnover.
Col
www.colbrown.co.uk
From United Kingdom, London
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The figures for the cost of employee turnover do vary. For managers and professionals, you can anticipate them being in excess of a year's salary for a good employee. In some cases, 150% of salary is a realistic figure. For manual workers, 50% of salary might be a reasonable estimate. In the UK, very few companies take the trouble to calculate the real cost of turnover.
Col
www.colbrown.co.uk
From United Kingdom, London
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Dear Colleagues,
Understanding the Cost of Employee Turnover
When we talk about the cost of employee turnover, we should look beyond the physical monetary implications. Things to consider should include, but are not limited to, the following:
- Cost of administering resignation letters and documentation
- Recruitment cost for replacement: adverts placed in periodicals
- Cost of selection and the time it would consume from staffers
- Cost of getting a relief officer as a stop-gap
- Cost of administering the recruitment and selection process
- Cost of induction training for new employees
- Cost of employment itself: higher salary, official car, etc.
- And at times, cost of litigation depending on the mode of departure of the employee.
On the whole, we as practitioners should try as much as possible to find ways of retaining our workforce.
Thanks
From Nigeria, Lagos
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7Understanding the Cost of Employee Turnover
When we talk about the cost of employee turnover, we should look beyond the physical monetary implications. Things to consider should include, but are not limited to, the following:
- Cost of administering resignation letters and documentation
- Recruitment cost for replacement: adverts placed in periodicals
- Cost of selection and the time it would consume from staffers
- Cost of getting a relief officer as a stop-gap
- Cost of administering the recruitment and selection process
- Cost of induction training for new employees
- Cost of employment itself: higher salary, official car, etc.
- And at times, cost of litigation depending on the mode of departure of the employee.
On the whole, we as practitioners should try as much as possible to find ways of retaining our workforce.
Thanks
From Nigeria, Lagos
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Dear Colleagues,
It was quite an interesting experience visiting Bob Gately's website. I downloaded the Employee Turnover guide he promised, which I found very useful and crucial.
An interesting comparison could be made by calling it "Motivation Tied To Career Anchor." I believe a visit by other members would greatly benefit us, exposing us to different perspectives, especially from consultants.
Thank you.
From Nigeria, Lagos
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It was quite an interesting experience visiting Bob Gately's website. I downloaded the Employee Turnover guide he promised, which I found very useful and crucial.
An interesting comparison could be made by calling it "Motivation Tied To Career Anchor." I believe a visit by other members would greatly benefit us, exposing us to different perspectives, especially from consultants.
Thank you.
From Nigeria, Lagos
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Dear Col,
The company I am working for has a comparatively very high turnover rate compared to other companies in the same industry. I have calculated the cost of turnover using 90% of the salary (the figure comes in billions). However, our company feels that as long as it can recruit new and bright people, it's okay, as the recruitment cost is lower than the cost incurred for the growth of employees. Is this the right mindset? If not, how can I, as an HR Executive, change the mindset of my superiors in the HR Department and others?
Can you help?
Pranati
From India, Mumbai
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The company I am working for has a comparatively very high turnover rate compared to other companies in the same industry. I have calculated the cost of turnover using 90% of the salary (the figure comes in billions). However, our company feels that as long as it can recruit new and bright people, it's okay, as the recruitment cost is lower than the cost incurred for the growth of employees. Is this the right mindset? If not, how can I, as an HR Executive, change the mindset of my superiors in the HR Department and others?
Can you help?
Pranati
From India, Mumbai
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Hi,
Let me know if this method of calculating the Annual Employee Turnover works for you...
Type - I:
To measure employee turnover accurately, the preferred approach is a rolling method, i.e., calculating the annualized turnover rate. Track turnover monthly and annually but always compute it annualized. This annualized figure provides a consistent basis for comparison and trending.
Employee Turnover = Total number of agents exiting the job during the period X 12
Average number of agents during the period X number of months in the period
Average Number of agents = Full Balance of HR strength for all the months in the period
(during the period) Number of months in the period
e.g. If the total turnover for the 3-month period of Jan-Mar is 10, and the average monthly staff is 100, then the annualized turnover is 40% = (10/100) X (12/3)
Type - II:
Employee turnover = Total number of agents leaving the call center in a month X 12
Number of agents at the end of the month
Type - III:
Employee turnover = Total number of agents leaving the call center during the period
Number of agents at the beginning of the period
Usually, the time period is one year. Also, the total number of agents leaving includes voluntary, involuntary, and internally transferred agents. However, there are times when you may want to exclude transferred and/or terminated agents.
(Number of people left in a period/Average number of employees in a period) X 100
(Number of Separations/Mid-Month Employment) X 100
(Number of Resignations/Current Manpower) X 100
(Total Number of people left voluntarily in a period/Average number of people employed in that period) X 100
Long Service Stability Rate = Total number of employees with 1 year or more of service X 100
Average number of employees at the start of that period
Fringe Turnover Rate = Number of employees joining and leaving within 1 year X 100
Average number of employees in 1 year
We can similarly calculate the employee turnover with respect to Sex, Age Groups, Type of Employees, Employment Levels, etc.
Regards,
Soumya Shankar
From India, Bangalore
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Let me know if this method of calculating the Annual Employee Turnover works for you...
Type - I:
To measure employee turnover accurately, the preferred approach is a rolling method, i.e., calculating the annualized turnover rate. Track turnover monthly and annually but always compute it annualized. This annualized figure provides a consistent basis for comparison and trending.
Employee Turnover = Total number of agents exiting the job during the period X 12
Average number of agents during the period X number of months in the period
Average Number of agents = Full Balance of HR strength for all the months in the period
(during the period) Number of months in the period
e.g. If the total turnover for the 3-month period of Jan-Mar is 10, and the average monthly staff is 100, then the annualized turnover is 40% = (10/100) X (12/3)
Type - II:
Employee turnover = Total number of agents leaving the call center in a month X 12
Number of agents at the end of the month
Type - III:
Employee turnover = Total number of agents leaving the call center during the period
Number of agents at the beginning of the period
Usually, the time period is one year. Also, the total number of agents leaving includes voluntary, involuntary, and internally transferred agents. However, there are times when you may want to exclude transferred and/or terminated agents.
(Number of people left in a period/Average number of employees in a period) X 100
(Number of Separations/Mid-Month Employment) X 100
(Number of Resignations/Current Manpower) X 100
(Total Number of people left voluntarily in a period/Average number of people employed in that period) X 100
Long Service Stability Rate = Total number of employees with 1 year or more of service X 100
Average number of employees at the start of that period
Fringe Turnover Rate = Number of employees joining and leaving within 1 year X 100
Average number of employees in 1 year
We can similarly calculate the employee turnover with respect to Sex, Age Groups, Type of Employees, Employment Levels, etc.
Regards,
Soumya Shankar
From India, Bangalore
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The hidden costs of employee turnover
When an employee walks away, the very first cost comes from the replacement. But replacing is not only about filling a vacancy. It is just the tip of the iceberg. Believe it or not, employee turnover costs more than you think.
A study by ERE Media found that the cost of replacing employees varies a lot by their levels:
- Cost of replacing entry-level employees: 30-50% of their annual salary
- Cost of replacing mid-level employees: 150% of their annual salary
- Cost of replacing high-level or highly specialized employees: 400% of their annual salary
Associated costs with each replacement
These following costs always go along with each replacement:
- Cost of recruiting
- Cost of onboarding
- Cost of training
- Cost of lost productivity
- Cost of decreased employee morale
- Cost of customer dissatisfaction
I also wrote an article about this issue "The Real Cost of Employee Turnover You May Never Think About" available at [URL="http://vnmanpower.com/en/real-cost-of-employee-turnover-bl300.html"]
Hope this helps.
From Vietnam, Hanoi
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When an employee walks away, the very first cost comes from the replacement. But replacing is not only about filling a vacancy. It is just the tip of the iceberg. Believe it or not, employee turnover costs more than you think.
A study by ERE Media found that the cost of replacing employees varies a lot by their levels:
- Cost of replacing entry-level employees: 30-50% of their annual salary
- Cost of replacing mid-level employees: 150% of their annual salary
- Cost of replacing high-level or highly specialized employees: 400% of their annual salary
Associated costs with each replacement
These following costs always go along with each replacement:
- Cost of recruiting
- Cost of onboarding
- Cost of training
- Cost of lost productivity
- Cost of decreased employee morale
- Cost of customer dissatisfaction
I also wrote an article about this issue "The Real Cost of Employee Turnover You May Never Think About" available at [URL="http://vnmanpower.com/en/real-cost-of-employee-turnover-bl300.html"]
Hope this helps.
From Vietnam, Hanoi
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Effective employee retention strategies-BPO. doc