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Employee Turnover Quiz

We know there is a turnover problem if . . .



    u      We aren't able to hire the right people for our organization.


    u      We know we have a turnover problem, but we don't know how to fix it.


    u      Our employees don't seem to be motivated.


    u      Employees morale appears to be low.


    u      We are not sure of the level of employee satisfaction.


    u      We are not sure we know why employees really quit.


    u      We are not consistent in performing exit interviews.


    u      Sometimes we are so short staffed that work schedules are not filled.


    u      We are not consistent with employee training.


    u      We have had task forces try to research and solve the employee turn-
           over issue.


    u      We don't have a system for tracking customer complaints.
Employee Turnover

         Cost of Turnover

         Turnover cost indicates how much turnover is costing and its impact on
         profitability. The cost of turnover includes the direct costs of recruiting new
         employees, interviewing time, administrative work that is associated with hiring
         and processing, training, supervisory time, and overtime that is paid to employees
         who have to cover for employees who are no longer there.

         For example:
              •     Number of employees ....................................................... 500
              •     Annual turnover .................................................................. 60%
              •     Number of employees turning over .................................. 300
              •     Average turnover cost per employee ........................... $1,694
              •     Total annual cost ...................................................... $508,000
              •     Savings from reducing turnover by 15% ................. $126,000


         Turnover costs also take into account indirect costs. Research indicates that the
         indirect costs of turnover can be 2 to 5 times higher than direct costs. These costs
         are more difficult to quantify and assign a dollar figure to, but they are very real.




1998 The People Solution Inc.
Calculating Employee Turnover Rates

                For Example


                      •    Terminations            =        300
                      •    Number of employees     =        500
                      •    300 - 500               =         60%


                Calculate your turnover rate

                For the last 12-month period, add up the number of terminations.
                Next divide by the total number of employees at the end of the same
                12-month period.


                      •    Terminations            =   _______
                      •    Number of employees     =   _______
                      •    Your turnover rate      =   _______%




1998 The People Solution Inc.
Calculating Direct Turnover Costs

    Recruiting Cost

    Advertising, radio, direct mail etc.

    Interviewing Costs (time spent x the wage of the interviewer)

              Interviewing

              Reference Checks

              Exit Interview (time spent x the wage of the processor)

    Administrative Costs (time spent x the wage of the administrator)

              Processing of paper work for newly hired employee

              Processing of paper work of exiting employee

              Uniform Costs

    Supervision Costs (Time spent x the wages of the manager)

    Training Costs

              Time spent training (xx hrs.) x wage of employee

              Time spent training (xx hrs.) x wage of trainer

              Materials, equipment, job aids

    Separation of Costs

              Average cost of unemployment, separation pay, legal claims

              Overtime costs to do work of exiting employee

                                     Total for Direct Costs




1998 The People Solution Inc.

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Calc turnovr

  • 1. Employee Turnover Quiz We know there is a turnover problem if . . . u We aren't able to hire the right people for our organization. u We know we have a turnover problem, but we don't know how to fix it. u Our employees don't seem to be motivated. u Employees morale appears to be low. u We are not sure of the level of employee satisfaction. u We are not sure we know why employees really quit. u We are not consistent in performing exit interviews. u Sometimes we are so short staffed that work schedules are not filled. u We are not consistent with employee training. u We have had task forces try to research and solve the employee turn- over issue. u We don't have a system for tracking customer complaints.
  • 2. Employee Turnover Cost of Turnover Turnover cost indicates how much turnover is costing and its impact on profitability. The cost of turnover includes the direct costs of recruiting new employees, interviewing time, administrative work that is associated with hiring and processing, training, supervisory time, and overtime that is paid to employees who have to cover for employees who are no longer there. For example: • Number of employees ....................................................... 500 • Annual turnover .................................................................. 60% • Number of employees turning over .................................. 300 • Average turnover cost per employee ........................... $1,694 • Total annual cost ...................................................... $508,000 • Savings from reducing turnover by 15% ................. $126,000 Turnover costs also take into account indirect costs. Research indicates that the indirect costs of turnover can be 2 to 5 times higher than direct costs. These costs are more difficult to quantify and assign a dollar figure to, but they are very real. 1998 The People Solution Inc.
  • 3. Calculating Employee Turnover Rates For Example • Terminations = 300 • Number of employees = 500 • 300 - 500 = 60% Calculate your turnover rate For the last 12-month period, add up the number of terminations. Next divide by the total number of employees at the end of the same 12-month period. • Terminations = _______ • Number of employees = _______ • Your turnover rate = _______% 1998 The People Solution Inc.
  • 4. Calculating Direct Turnover Costs Recruiting Cost Advertising, radio, direct mail etc. Interviewing Costs (time spent x the wage of the interviewer) Interviewing Reference Checks Exit Interview (time spent x the wage of the processor) Administrative Costs (time spent x the wage of the administrator) Processing of paper work for newly hired employee Processing of paper work of exiting employee Uniform Costs Supervision Costs (Time spent x the wages of the manager) Training Costs Time spent training (xx hrs.) x wage of employee Time spent training (xx hrs.) x wage of trainer Materials, equipment, job aids Separation of Costs Average cost of unemployment, separation pay, legal claims Overtime costs to do work of exiting employee Total for Direct Costs 1998 The People Solution Inc.