How To Calculate And Combat The Cost Of Employee Turnover

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Do you know the rate of employee turnover at your company? Have you ever wondered how to calculate this cost and reduce employee turnover? We’re here to help!

At Roundtable Learning, we work with clients across the globe to implement training solutions that boost employee productivity and reduce employee turnover. We’ve learned that custom training programs benefit both an organization itself and its individual employees.

This article will overview how to calculate the cost of employee turnover, provide examples of calculating this expense, and supply training solutions that can help reduce employee turnover at your organization. 

How To Calculate The Cost Of Employee Turnover

While the national average of employee turnover sits at an annual 17.8%, the rate varies among industries.

To calculate the cost of turnover to your organization, you’ll need to consider many factors, including:

• Time spent filling vacant positions
• Hours of productivity lost prior to vacancy
• Time spent filling positions, including job advertisements, recruiters, background checks, and interviews
• Time that employees spend doing ex-employees’ work until replacements are found
• Hours of orientation and training spent on employees who leave

Examples Of Calculating Employee Turnover Cost

For example, if you have 1,000 employees and 15% turnover each year, you’re responsible for training new employees to fill those open positions. If training each new employee takes two weeks at 40 hours per week, and your new employees make $15 an hour, you can anticipate spending almost $200,000 a year. That cost doesn’t even cover the trainer’s salary, recruiting, or the sunk costs of turnover.

You also sacrifice weeks of productivity. Companies with 1,000 – 10,000 employees require about 26 days, on average, to refill a position. That time increases depending on the role and title of the position you’re filling.

While you can’t eliminate employee turnover completely, you can keep these costs at a minimum if you invest in your training strategy through onboarding, skills and product training, and continued education.

Onboard Your New Hires

Onboarding should include not just your organization’s policies, but also your organization’s culture. By onboarding, you can set your employees on the right path within the first two weeks of their job.

Give your new hires an opportunity to understand their roles before they begin. If they’re required to take a course on the products they’ll be selling or handling prior to their start date, you may be able to weed out employees who wouldn’t have thrived in the position.

Read More: 5 Goals Of Onboarding That Every Program Should Have

Invest In Skills And Product Training

Skills and product training is incredibly important for your channel partners, sales, and distribution teams. If they feel like they don’t have access to training, job aids, and product information when they’re on the job, they’ll become frustrated with their positions and may want to leave.

Consider Creating A Continued Education Plan

You should also invest in continued training to keep your employees happy. As more millennials join the workforce, their proven interest in continued learning and development will drive their loyalty to your company.

Knowledge transfer, succession planning, and career pathing are important to your employees. Have training in place that encourages your employees to succeed, and they won’t be as tempted to leave.

Reduce Your Employee Turnover By Investing In Training

Are you ready to invest in your training, rather than invest in filling vacant positions year after year? We’ll consult with you to create a new training strategy that will engage and retain your employees.