Recruitment/Turnover Cost Calculator

The costs associated with recruitment and turnover can rob any business of profits.

Unfortunately, few small business owners or managers know what these costs are. Even fewer believe the numbers when they see them.

I met with the General Manager of a large employer here in Red Deer a few years ago. He told me they had 1000 employees at that time. While they had a core group of long term employees, their turnover was 100%. That means they hired 1000 employees in a year. That also meant they were experiencing turnover in multiple positions several times a year.

This is not an unusual situation. Many businesses experience the same thing.

This General Manager also told me his HR department told him turnover costs were $2000 per employee. Well a quick calculation in my head and I said, “So turnover is costing you two million dollars a year.”

Well his jaw almost hit the floor! Strangely, he obviously had never stopped to do the math himself.

He spent the next few minutes explaining to me how that couldn’t possibly be correct.

I’ve heard other business managers and owners do the same thing. It’s hard to accept that turnover can place that much of a drain on a business. The reaction is often the same…it couldn’t possibly be costing us that much.

Sadly, it’s true. Turnover and recruitment does cost that much.

But it doesn’t have to be that way. You can improve your turnover rates with a little effort. And no matter what economy we’re in, it’s important to make the effort to improve turnover and reduce the associated costs.

The first step is to calculate your own turnover costs so you know where you stand. Knowing your own beginning numbers will help you know how much difference your efforts are making. It’s also likely to motivate you to make the changes necessary to reduce that turnover.

(C) 2009 Peak Performance Coaching/Accidental-HR

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{ 1 comment… read it below or add one }

Natasha May 4, 2010 at 11:54 pm

Very useful… :)

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