The cost of employee turnover can be deceivingly expensive and affect more than just the bottom line. Consider both the tangible and intangible costs of turnover.
Tangible Costs
There are three areas of tangible costs that employers should consider when looking at turnover — termination, interim and hiring.
Termination Costs
- Administration
- Exit interviews
- Severance pay
- Unemployment compensation
Interim Costs
- Increased costs due to increased overtime or temporary employees, to complete the tasks of the vacant position, and administrative costs related to the same.
Hiring Costs
- Attracting applicants
- Entrance interviews
- Testing
- Travel/moving expenses
- Pre-employment administrative expenses
- Medical exams
- Training costs
Intangible Costs
Many employers don't fully consider the impact that turnover has on existing employees. In addition to the added responsibilities that remaining employees must perform due to the loss of a key employee, turnover also causes overall stress, tension and decreased employee morale — intangible costs that can quickly become tangible.
Existing employees often see their peer progressing to a new company and may feel that they should explore the possibilities as well. This is less likely to occur when employees value their jobs individually, and their employment with the company as a whole.
Although intangible turnover costs are difficult to measure, tanbigle costs can be measured with some specificity. A turnover cost calculator tool with instructions and explanations is available to members.