Turnover Costs

Ascend Profiles reviewed a number of different sources to deliver some different estimates of turnover costs.

  • The Department of Labor reports the average cost of a bad hiring decision amounts to 30 percent of the new employee’s first year’s potential earnings, if the employee is replaced in the first six months.
  • Another source estimates it costs 30-50% of the annual salary of entry-level employees, 150% of middle level employees, and up to 400% for specialized, high level employees.
  • A third source notes that hiring the wrong individual typically costs an organization 150% of the employee’s annual salary.

You will quickly see that an investment in a tool that can reduce turnover costs by helping to select the right employees and enhance their productivity is a great value for any organization.

There are many different types of costs to consider when estimating or calculating turnover costs:

  • Exit costs
  • Recruiting
  • Interviewing
  • Hiring
  • Orientation
  • Training
  • Compensation & benefits while training
  • Lost productivity
  • Customer dissatisfaction
  • Reduced or lost business
  • Administrative costs
  • Lost expertise
  • Temporary workers