The Turnover Cost Calculator captures all the costs, both direct and indirect, of employee turnover. This calculator will help you identify the large and often undervalued financial impact of turnover. One important challenge is to decide which costs can be developed from cost statements and which costs will have to be estimated. Some costs are hidden and, consequently, never counted. The conservative philosophy is to account for all costs—direct and indirect.

The first step in monitoring turnover costs is to address issues about a cost control system. The key issues are presented below.

Some Costs Are Difficult to Determine

The difference that often exists between the cost estimates from HR and the actual turnover cost lies in the indirect or hidden costs. Where direct costs are usually in the cost accounting system, the hidden costs are almost never considered. However, they can be developed using assumptions and estimation processes.

Fully-Loaded Costs

Using the approach to capturing the fully-loaded costs of turnover, each cost is identified and entered into a specific category. Where an estimate is required, the entry is adjusted later. If possible, someone from finance and accounting should review and approve the data. The process should withstand even the closest scrutiny, so organizations must ensure that all costs are included.

Reporting Total Cost

Costs are typically expressed as a percentage of the wages and salaries of the employees in a particular job group. This figure is usually determined by a detailed cost study. The percentage can be fixed for a group (e.g., the sales force) or a specific job (e.g., client relationship manager).

For example, if a cost study in another industry has concluded that the cost to replace a CRM averages 150 percent of pay, this amount can be a beginning point. If there is some concern about the cost being too high, perhaps a lower number would be appropriate, such as 120 percent or 100 percent. After a figure has been determined, the turnover cost is then reported on statements along with the actual costs.

How to Use this Calculator

Enter the value of each defined cost. After completing each section, click next. A total cost for each section is displayed at the bottom of the calculator. Page 8 will total the cost of each section for a total turnover cost.

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