How do you calculate turnover cost?
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I believe these are the following costs to consider:
1) 'Replacement Cost' who is the person working on the tasks while seeking out the new talent. Should be a ratio because the person's work will be impacted till the new replacement is found and onboard.
2) Search Cost which is the time, effort and monies to look for the new talent, interviewing and confirming the offer
3) Onboarding Cost which is the time taken for the new talent to understand the business environment, company environment, etc to the point the new talent is pretty much familiar with the relevant processes and policies.
There are several ways to calculate turnover cost. Below is the most exhaustive list of calculations that I can think of:
1. External Cost:
- Consultant Cost
- Time Values of Hiring/Sourcing Manager
- Cycle time- Shortlisting to Joining
2. Interview Cost:
- Man-hours of Interviewers
- External Assessment (if any)
- Travel Reimbursement (if applicable)
3. Onboarding Cost:
- Onboarding cost (Induction, IT Assets, New Joiner Kit)
- Induction + Training Cost
- New Joiner Salary/Bonus
4. Opportunity Cost:
- Time spent in employee becoming productive
- Time spent by Buddy/Manager/Immersion/OJT
- Complete cycle cost to be sent in sourcing & hiring another candidate
5. And Finally Intangible Costs:
- The Cost Of Possible Poor Customer Experience!
- Delayed Projects!
- Reputation! (of department, team, Manager, Recruiter)
- And the Stress! (both for Manager & New Hire + Team)