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Knowing how much money it really costs to
lose or replace an employee helps identify
where your organization may want to focus
more attention in regards to human resources
management.
There are many factors associated with
turnover and each of those factors is different
for each organization.
The following worksheet is a guide to some of
the factors you may want to consider when
calculating turnover costs.
Opportunity Costs
This is one of the hardest costs to factor into
turnover but can often be given a numerical
figure if there is loss of revenue from an
outgoing employee.
If the outgoing employee is a Sales
Representative or Account Manager, there
could be direct loss of sales from the person
leaving. This would have to be factored
into the calculation as well.
There are also many other factors that are
not so easily calculated as a numerical
value such as:
Loss of morale
Loss of motivation
Loss of teamwork
Indirect resignations
Stress from overwork
Loss of productivity
Legal ramifications
Damage to company image
Use the following worksheet to estimate your
organization’s turnover costs. Contact us to
find out how we can start helping you reduce
turnover costs.
How to Calculate Turnover Costs Finding out how much turnover really costs
41% The number of employees that
left companies voluntarily
in 2009 according to the
US Bureau of Statistics
Calculating Turnover Costs
S p e c t r u m C o n s u l t i n g J a p a n
Page 2
ADVERTISING COSTS SAMPLE
JOB POSTINGS (30 DAYS) 65000
NEWSPAPER ADS (2 WEEKS) 25000
OTHER 28650
TOTAL= ¥118,650
RECRUITING COSTS SAMPLE
OUTSOURCING FEES 65000
HR MANAGER FEES (TIME x HOURLY WAGE) 28125
PHONE SCREENER (TIME x HOURLY WAGE) 49650
BACKGROUND CHECKS (TIME x HOURLY WAGE) 36190
INTERVIEWER (TIME x HOURLY WAGE) 36300
REFERENCE CHECKS (TIME x HOURLY WAGE) 28200
OTHER
TOTAL= ¥243,465
ADMINISTRATIVE COSTS SAMPLE
COMPUTER MAINTENANCE
TELEPHONE SETUP 1500
LETTERHEAD, ENVELOPES, PRINTED MATERIAL 8500
SECURITY BADGES 500
BUSINESS CARDS 4500
LOCKERS, KEYS, ETC. 500
UNIFORMS
E-MAIL ACCOUNT SETUP
OTHER
TOTAL= ¥15,500
Calculating Turnover Costs
S p e c t r u m C o n s u l t i n g J a p a n
Page 3
TRAINING COSTS SAMPLE
PAID TRAINING FEE 30000
TRAINER (TIME x HOURLY WAGE) 56250
TRANSPORTATION COSTS 4650
ACCOMMODATION (HOTEL, ETC.) 28500
MEETING ROOMS 25000
OTHER
TOTAL= ¥144,400
PAYROLL COSTS SAMPLE
PAID LEAVE AMOUNT REMAINING 92500
OUTSTANDING BONUS PAYMENTS
UNPAID BONUSES (this should be subtracted (-) from the total) -125000
INCREASED SALARY FOR NEW HIRE (ANNUAL) 300000
INCREASED BENEFITS FOR NEW HIRE (ANNUAL) 78000
INSURANCE ADJUSTMENTS 14800
FINAL SALARY ADJUSTMENTS
OTHER
TOTAL= ¥267,800
OPPORTUNITY COSTS SAMPLE
LOSS OF REVENUE
(this should be an annual or lump sum amount and represent any losses such as
sales revenue or accounts from the outgoing employee )
125000
OVERTIME HOURS TO COVER TERMINATED EMPLOYEE
(TIME x HOURLY WAGE)
95220
OTHER (such as legal fees, damage to company property, image, etc.)
TOTAL= ¥220,220
Calculating Turnover Costs
S p e c t r u m C o n s u l t i n g J a p a n
Page 4
TOTALS SAMPLE
ADVERTISING TOTAL ¥118,650
RECRUITING TOTAL ¥243,465
ADMINISTRATIVE TOTAL ¥15,500
TRAINING TOTAL ¥144,400
PAYROLL TOTAL ¥267,800
OPPORTUNITY COST TOTAL ¥220,220
TURNOVER COST=
(for 1 employee) ¥1,010,035
TURNOVER RATE SAMPLE
Add up the number of terminations over the last 12 months then divide by the total number of
employees at the end of the same period
NUMBER OF TERMINATIONS (12-MONTH PERIOD) 15
TOTAL NUMBER OF EMPLOYEES 125
TURNOVER PERCENTAGE= 12%
TOTAL COST OF TURNOVER SAMPLE
Add up the number of terminations over the last 12 months multiplied by the average turnover cost
per employee
NUMBER OF TERMINATIONS (12-MONTH PERIOD) 15
AVERAGE TURNOVER COST PER EMPLOYEE
(this amount is calculated by totaling all terminated employees’
individual turnover costs and dividing by the number of turnovers for a
12-month period)
¥875,060
TOTAL ANNUAL TURNOVER COST= ¥13,125,900
Calculating Turnover Costs
S p e c t r u m C o n s u l t i n g J a p a n
Page 5
ADVERTISING COSTS
JOB POSTINGS
NEWSPAPER ADS
OTHER
TOTAL=
RECRUITING COSTS
OUTSOURCING FEES
HR MANAGER FEES (TIME x HOURLY WAGE)
PHONE SCREENER (TIME x HOURLY WAGE)
BACKGROUND CHECKS(TIME x HOURLY WAGE)
INTERVIEWER (TIME x HOURLY WAGE)
REFERENCE CHECKS (TIME x HOURLY WAGE)
OTHER
TOTAL=
ADMINISTRATIVE COSTS
COMPUTER MAINTENANCE
TELEPHONE SETUP
LETTERHEAD, ENVELOPES, PRINTED MATERIAL
SECURITY BADGES
BUSINESS CARDS
LOCKERS, KEYS, ETC.
UNIFORMS
E-MAIL ACCOUNT SETUP
OTHER
TOTAL=
Calculating Turnover Costs
S p e c t r u m C o n s u l t i n g J a p a n
Page 6
TRAINING COSTS
PAID TRAINING FEE
TRAINER (TIME x HOURLY WAGE)
TRANSPORTATION COSTS
ACCOMMODATION (HOTEL, ETC.)
MEETING ROOMS
OTHER
TOTAL=
PAYROLL COSTS
PAID LEAVE AMOUNT
OUTSTANDING BONUS PAYMENTS
UNPAID BONUSES (this should be subtracted (-) from the total)
INCREASED PAY FOR NEW HIRE
INCREASED BENEFITS FOR NEW HIRE
INSURANCE PAYMENTS
FINAL SALARY ADJUSTMENTS
OTHER
TOTAL=
OPPORTUNITY COSTS
LOSS OF REVENUE
(this should be an annual or lump sum amount and represent any losses
such as sales revenue or accounts from the outgoing employee )
OVERTIME HOURS (TIME x HOURLY WAGE)
OTHER (such as legal fees, damage to company property, image, etc.)
TOTAL=
Calculating Turnover Costs
S p e c t r u m C o n s u l t i n g J a p a n
Page 7
TOTALS
ADVERTISING TOTAL
RECRUITING TOTAL
ADMINISTRATIVE TOTAL
TRAINING TOTAL
PAYROLL TOTAL
OPPORTUNITY COST TOTAL
TURNOVER COST=
(for 1 employee)
TURNOVER RATE
Add up the number of terminations over the last 12 months then divide by the total number of
employees at the end of the same period
NUMBER OF TERMINATIONS (12-MONTH PERIOD)
TOTAL NUMBER OF EMPLOYEES
TURNOVER PERCENTAGE= %
TOTAL COST OF TURNOVER
Add up the number of terminations over the last 12 months multiplied by the average turnover cost
per employee.
NUMBER OF TERMINATIONS (12-MONTH PERIOD)
AVERAGE TURNOVER COST PER EMPLOYEE
(this amount is calculated by totaling all terminated employees’
individual turnover costs and dividing by the number of turnovers for a
12-month period)
TOTAL ANNUAL TURNOVER COST=
