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
- Compensation & benefits while training
- Lost productivity
- Customer dissatisfaction
- Reduced or lost business
- Administrative costs
- Lost expertise
- Temporary workers