6.2 Cost of Employee Turnover
The cost of a bad hire causing employee turnover varies. It could be a few thousand dollars to several hundred thousand dollars. The cost depends on the industry, the position, the location, etc.
Some studies (SHRM) say it takes 6-9 months salary to pay for just recruitment and training costs. The total costs have to include the following:
- Interview time
- Screening costs
- Management Time
- Lost Productivity
- Lost Productivity
- Customer service errors
- Reduce other employee productivity
- Lost Opportunities
- Strained or severed interdepartmental ties and communication
- Reduces Morale
- Reputation Costs
Studies are all over the board. For a low pay, high turnover position, the costs are 15-20% of annual salary. For mid-level medium pay, medium turnover level, it increases to 20-40% of salary. For C-level positions, high pay, low turnover positions, the costs may be 2-4 times annual salary.
Organizations should calculate their own cost of turnover by position segment. One method is to take the costs to fill the position + costs to train the new hire – lost productivity of position to be filled X the average number of employees turning over annually X twelve + organizational annual turnover costs.
For a minimal cost as compared to the cost of turnover, the Priority Bridge Assessment Tool will assist in increasing the percentage of good hires and reduce turnover costs. Employees see this tool as an unbiased assessment of their fit into an organization. This analytical approach is seen as a fair and valid assessment tool.
Priority Bridge LLC. Is dedicated to helping organizations of all types achieve greater success by using a proprietary analytical process that increases the cultural fit of employees to an organization. Hire right the first time - every time with the right cultural fit using Priority Bridge.
Priority Bridge - “ Strengthening Organizational Culture “ Priority Bridge 6.2 Cost of Employee Turnover