When an employee leaves an organisation there is a cost involved. Many industries have average staff turnover or attrition rates that are expected or at least tolerated.
Here is an idea of the many factors which impact the overall cost of a departing employee:
- The manager and HR will be spending time filling the vacant position, including advertising, selecting candidates, arranging interviews and taking them, second interviews, background checks etc.
- The time spent removing the departing employee from systems and authorisation processes.
- The time cost of setting up a new employee on employee systems, setting up a workspace and collating various induction paperwork.
- It’s very rare that a departing employee increases or maintains productivity, therefore a drop in productivbity is to be expected. In some cases they are put on what’s called ‘garden leave’ so as not to disrupt ongoing activity.
- Training and orientation of replacement staff can take from several days to months depending on the role and industry.
- It’s unusual to have no gap between an employee leaving and a replacement starting therefore further lost productivity is to be expected.
- There may be an overtime cost if other staff have to pick up more work in the meantime.
The overall cost is simply calculated by adding up the respective time taken for each task multiplied by the average hourly wage of the person carrying out the task
Obviously there are assumptions to be made on the amount of downtime or drop in production and the relevant actual cost but it gives an idea of how much staff turnover can cost a business.
