Here’s an interesting tool to check out. It’s an interactive Employee Turnover Cost Calculator. You can use this interactive Employee Turnover Cost Calculator to estimate your costs due to undesirable employee turnover. By entering just six values you will be able to estimate:
- Total Separation Costs
- Total Replacement Costs
- Total Training Costs
- Total Turnover Cost per Year
There is also a larger version of this calculator. It does the same calculations but also shows the background costs and documentation, plus you can enter values for up to five additional kinds of replacement cost. To use the large version of the Turnover Cost Calculator,click here.
I went through several scenarios and found it quite useful. However, I’ve also noticed that these numbers may actually be too conservative. For example, it’s been estimated that the cost of employee turnover is three times their salary. For example, factor in what it costs your company every time a salesperson misses out on a selling opportunity. And we can’t forget the additional costs such as: customer complaints, the lead itself, lost prospects, management’s time, your time, (what else could you have accomplished if you weren’t working on this?), employee morale, your competitive edge, recruiting, training, materials, administrative costs, benefits and of course, the cost of replacing this salesperson!
The final cost to your company can total hundreds of thousands of dollars in lost revenue as well as your fixed costs, depending upon how long you keep an underperformer such as an underperforming salesperson aboard who you’re better off without.
Not sure how accurately this reflects these very costly but hidden expenses. What do you see that works? Is this a valuable tool for you, as a manager or business owner? Let me know if you see any other variables that need to be considered as well.