Employee turnover is sometimes expected, but when it is excessive it can diminish an organization's morale and budget. The excessive costs from high turnover rates can leave companies in unnecessary debt and without the workforce necessary to remain productive.
Excessive employee turnover has severe monetary costs, but there are other costs to be considered. Typically it takes new employees several months to become fully productive. Every time a new employee is hired he must undergo training and gain substantial experience before he can excel at his new position. The time, effort, and money invested in onboarding and developing new employees are lost each time an employee leaves.
Top 5 Strategies for Identifying & Hiring Great Employees
Learn how to reduce employee turnover costs.
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Estimate Your Costs
For a ballpark estimate of the money your organization loses to employee turnover, we suggest using a conservative one third of the total payroll of the people who left. Even that seemingly small number has a larger impact than expected on costs and budget for any size organization.
"What can your organization accomplish with the money saved from reducing turnover costs?"
Employee Turnover Cost Analysis and Return on Investment
Let's look at a company with 100 employees and an annual turnover rate of 20%. At this company, the turnover cost is three months' wages (a conservative amount). If the average wage is $9.00 per hour plus 20% in benefits, then the existing yearly employee turnover cost is 100 employees x 20% x $5,616 (including benefits) = $112,320 per year.
Let's say this same company realized how their turnover costs were impacting business, and so they decided an appropriate solution would be to use the ProfileXT®. Once they implemented the ProfileXT®, turnover reduced by 50%. This reduction in turnover will save their company $56,160 each year.
With the help of Profiles International products, you do not have to surrender to your employee turnover rate. Profiles International will help you identify top performers the first time, as well as match existing employees to the positions in your organization that provide the best job fit. By focusing on job fit, you will increase your organization's retention of key employees.