With September just around the corner, employers are preparing to see five times the number of resignations this month compared to any other month in the year (1), and turnover is expensive! If you were to guess the cost of turnover in your organization, taking into account all costs from the cost of hiring a new employee, to the loss of new business and client relationships due to the vacant role - what would you estimate your total cost to be?
In 2009, the median cost of resignations per organization for a workforce of 500 was $1.2 million. In 2010, the cost increased by 60% to $1.9 million, and this trend is expected to continue (2). Another study found that the turnover cost for each resigned employee ranges from 90% to 200% of his or her salary, and up to 500% for highly skilled employees (3) .
While these studies have helped to calculate the quantifiable cost of turnover, there are still many other factors that come into play when measuring turnover costs. Perhaps the greatest example would be the cost shifting the organizational focus from core business operations and delivery, to searching for Top Talent.
It’s evident - the cost of turnover is high. However, if properly leveraged, turnover can be a positive change that brings the opportunity to realign and jump start your organization. Leveraging turnover means taking advantage of the opportunity to bring in new talent, to upgrade skills and abilities, and to reinvigorate energy. Key to this, of course, is having a hiring process that is well defined, consistent and effective.
To calculate the Real Cost of a Hire at your organization, click the link below!
(1) Resource on Demand
(2) HR Metrics Service
(3) Abbott, De Cieri and Iverson: Costing Turnover
