1. DOWNLOAD Calculator

2. Turnover Cost Formula

Select a department or job function that has turnover associated with it. Use an actual number or, lacking exact statistics, estimate the number of people who left the job or department during the past 12 months. Write that number below on Line 4.

The average cost of Turnover is 25% of an employee's annual salary/wages (Line 1) plus the cost of the benefits (Line 2) you provide. Typical benefits amount to about 30% of wages.* The total cost per employee (Line 3) is the total of Line 1 and Line 2.

1. Annual wage: $ __________ X .25 = $ __________
2. Annual wage: $ __________ X .30 = $ __________
3. Total turnover cost per employee (add Lines 1 and 2) = $ _____________
4. Total number of employees who left: ______________________________
5. Total cost of turnover (multiply Lines 3 and 4) = $ _______________

*Source: Saratoga Institute and Kepner-Tregoe, Inc. Total costs of a complete benefits package in addition to payroll.

3. Fraud/Theft Cost Formula

(Department of Commerce, University of Florida, University of Minnesota studies show that 30% of employees steal from their employers. The Department of Commerce places corporate fraud at the top of "Crimes Against Business" list. The following formula is based on National Studies.)*

30 employee thieves* x $3,000 per year** = $90,000. (**Source: Silent Partner Study 1984 to present)

Let's say only half that number are stealing and they are stealing only half as much as the National Average: 15 employee thieves x $1,500 per year = $22,500.

Use your company's own data to determine how much you could be losing:

Number of employees in company: __________
Multiply by: x 30%* or 15% = ______________
Multiply by: x $3,000**
= Total Annual Losses of: $ ______________ Compared to Corporate Combat® Fee

Total does not include lost productivity, cost of investigation, apprehension, and hiring and training a replacement.

Add Line 5 "Total cost of turnover" to "Total Annual Losses" then compare that figure to the low cost of prevention provided by Corporate Combat, Inc. Cost of preventing fraud/theft and high turnover equals a fraction of the above, calculated, losses.

Learn how easy it is to "virtually" prevent fraud, theft, and high turnover as well as dealing with other loss prevention, human resource, and risk management issues. If our Websites do not answer your questions or concerns to your full satisfaction, you are invited to call us toll-free:

USS-C-COMBAT (877-226-6228)

4. Instant Online Worksheet!

The following worksheet will help you calculate the cost of employee turnover for your company. Knowing the cost of losing and then replacing an employee will help you determine how much you can afford to invest in keeping them. It will also help you analyze whether your investment in keeping your employees is adding to your bottom line.

The accompanying worksheet was adapted from formulas developed by Wayne Cascio (see Costing Human Resources, PWS-Kent, 1991) and H.L. Smith and W.E. Watkins (see"Managing Manpower Turnover Costs" in Personnel Administrator, vol. 23 #4, 1978). Smith and Watkins identified three major cost categories: separation costs, replacement costs, and training costs. Cascio added a category to include the performance differential between the employee who leaves, and the replacement. We've added another category, vacancy costs, to account for the added costs/savings realized while the position is vacant.

Separation costs include:

• the costs incurred for exit interviews;
• administrative functions related to termination;
• separation/severance pay; and
• any increase in unemployment compensation.

Vacancy costs include the net cost/savings incurred due to increased overtime or temporary employees needed to complete the tasks of the vacant position.

Replacement costs include the cost of:

• attracting applicants;
• entrance interviews;
• testing;
• travel/moving expenses;
• preemployment administrative expenses;
• medical exams; and
• acquisition and dissemination of information.

Training costs include both formal and informal training costs. Performance differential recognizes the difference in productivity between those who leave and their replacements (Cascio, 1991).

Typically separation, replacement, and training are all net costs. However, vacancy costs and the performance differential can result in either a net cost or savings. For example, if overtime and/or temporary employees' costs are less than the employee would have earned while the position is vacant, a vacancy savings occurs. If the new employee's performance exceeds the predecessor's, a net performance benefit can result.

It's important to note that only tangible costs are included on this worksheet. Intangible costs are just as real and often much greater than the costs we can quantify. Examples of intangible costs include: the uncompensated increased workloads other workers assume due to vacancies, the stress and tension turnover causes, declining employee morale, and decreased productivity due to loss of work group synergy. These costs are very real. However, they are difficult if not impossible for most businesses to measure. Just be aware that completing this worksheet will provide you with only a portion of the total cost of employee turnover.

When completing this worksheet, include all quantifiable costs -- salary, materials, and expenses. A final reminder: This is simply an example, not your own customized worksheet. Modify, add, or delete categories as appropriate for your business.

Separation Costs

Cost of exit interviewer's time (15 minutes preparation; 30-minute interview; and 15-minute follow up @$18 per hour)

+ Cost of terminating employee's time (30 minutes @$9.50 per hour)

+ Cost of administrative functions related to termination (2 hrs @ $12)

+ Separation pay (1 week @ $320)

+ Increase in unemployment tax (marginal rate increase + add tax)

Vacancy Costs

Cost of additional overtime (20 hours@ $14.25 per hour for 3 weeks)

+ Cost of additional temporary help (20 hours @ $11 per hour for 2 weeks)

- Wages and benefits saved due to vacancy (40 hours @ $9.50 per hour for 3 weeks)

Replacement Costs

Preemployment administrative expenses (3 hours @ $12)

+ Cost of attracting applicants (ads, agencies, and staff time)

+ Cost of entrance interviews (5 interviews x 1 hour x $16)

+ Testing costs (aptitude, skill, drug--1 hour @ $16 + $30)

+ Staff costs (staff meetings -- one 30-minute meeting with 3 people @ $16 per hr)

+ Travel and moving expenses (interviewees and new employee)

+ Postemployment information gathering and dissemination costs (payroll, benefits, policies,

+ Cost of postemployment medical exams

Training Costs

Cost of informational literature (manuals, brochures, policies)

+ Formal training costs

+ Informal training costs (OJT, mentoring, socializing - 1 day @ $16 per hour +

1 day @ $9.50 per hour)

Performance Differential

Differential in performance costs/benefits (salary differential, vacancy lag, learning curve)

TOTAL TURNOVER COSTS PER EMPLOYEE