Cost of Turnover Management

Cost Reduction Opportunity

Estimates of what the staff turnover may cost in relative terms vary significantly from 25% to 150% of an average employee salary. Under a conservative estimate of 25% a sizable company with staff of 10,000, average salary of $40,000/yr, and annual turnover rate of 10% will incur turnover costs of $10,000,000 a year.

HR professionals recognize increasing importance of owning the staff turnover fiscal metrics - turnover costs - as part of the value HR provides to the company. Knowing the costs of turnover can assist an employer in identifying pockets of the organization where reducing turnover may drive substantial cost reductions. While turnover will not be eliminated, every small reduction in turnover can save many organizations millions of dollars in costs.

Turnover can carry direct costs to a company, efficiency and productivity costs, as well as customer service degradation. Direct costs generally include departure costs (e.g., accrued vacation), vacancy costs (e.g., temporary replacement help, recruiting advertisement), and new hire costs (e.g., screening, relocation, increased salary over previous employee). Other costs can include decreased morale, diminished productivity while peers “cover” the vacancy, lost productivity of recruiters and hiring managers while recruiting a replacement, and training and ramp-up time necessary to achieve productivity levels required from the replacement employee.

The turnover fiscal metrics can utilize known costing methodology. The problem is creating synergy between theoretical models and actual information the models utilize. This information is likely to be spread over various places in IT, HR, and other business functions.

's Value Proposition

's Cost of Turnover Management application utilizes an aggregate turnover cost calculation model and cost specific models. The models are parameter-driven and user-configurable (Flexibility and Customization.) From the user interface, wizard-based features allow the following manipulations:

Include/Exclude the cost categories, and cost types within the category
Select calculation formulas, set coefficients and default values.
Include custom cost types defined for any transactional or linked data elements.

The application integrates all the existing data required by each category in the turnover cost calculations. Depending on the customer's configuration, the data can be linked and/or dynamically retrieved from multiple sources (Connecting to Existing Data.)

The Cost of Turnover Management application includes an intelligent reporting module with a variety of the standard parameterized reports to present various summaries and groupings of the categorized costs for a selected time period. Special reports can be added on customer request during the implementation. Ad-hoc reporting capabilities are provided by the Cost Analyzer module, which allows the users to produce conditional summary reports (Reporting and Planning.)

The current analytical capabilities within the application create the foundation for the planning module currently under development. This module will enable multi-variant planning of hiring and succession strategies.

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