Calculating The Cost Of Turnover

Employee turnover is a huge issue for businesses everywhere. The entire process of searching for and then hiring the right candidate for a job expends a lot of time and money. So when the person hand-picked to work for a company leaves, the pain can be much worse. 

Facing a tight labor market, those in the commercial cleaning industry are increasingly met with employee turnover. Figuring out exactly how much this turnover is costing a company is important.

Realizing the quagmire human resources departments face when trying to calculate turnover, Human Resource Executive ran a column providing unique insight into how turnover might be impacting business differently than what’s widely been believed.

The column cites research from the University of California Santa Barbara studying the impact turnover had on job performance in retail operations where frontline sales workers were leaving. The research discovered that a negative impact arose before the employees left the job. In fact, the business was negatively impacted by the situation when the employee first gave his or her two weeks’ notice, during those two weeks after the notice, at the time right after the employee left and during the period where the new employee replacing the position was being brought on board. Furthermore, the research shows that the majority of the damage was done before the employee left.

The study found the cost of turnover was so damning before the actual position change took place because the person leaving was putting forth much less effort and the office itself was experiencing a decrease in morale.

Human Resource Executive concluded that the cost of one employee leaving a company is equal to losing about a third of what that employee made in a year. However, it cautions that figure does not factor in the cost of hiring a new worker.