Calculate turnover costs and turnover rate
Most companies do not know what their actual turnover costs are and prefer not to talk about it. Primarily because poor figures here could indicate inadequate leadership qualities and damage their reputation.
According to the Gallup Report, 70% of the factors contributing to job dissatisfaction are directly linked to management. Therefore, it is hardly surprising that many employees do not leave the company, but rather their bosses.
Each of these departures increases your company's turnover rate and costs money. A lot of money. The Gallup Institute estimates the macroeconomic costs of employee turnover in Germany at up to 118.4 billion euros annually.
Average turnover costs
Various studies and research have attempted to provide an estimate of turnover costs. Some suggest that turnover costs can be about 50% to 150% of an employee's annual salary. This means that if an employee has an annual salary of 50,000 euros, for example, the turnover costs could be between 25,000 and 75,000 euros.
Calculate turnover costs and turnover rate
So what to do? First of all, it is important to calculate the turnover costs and the turnover rate in order to know the status quo. Various measures, such as PERSENTIS Analytics, can then help to reduce the turnover rate and the associated costs.
Direct and indirect exit costs
Turnover costs include not only the direct costs of recruitment and onboarding, but also indirect costs such as productivity losses, a decline in quality, additional workload for existing employees, and potential impacts on company culture.
Direct costs
- Severance payments
- Recruitment costs: Advertisements, recruitment agencies, selection processes, …
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Indirect costs
- Exit interviews: between HR, managers, and the employee
- Productivity losses: Loss of time during the onboarding phase until the new employee reaches full productivity.
- Quality losses: Potential errors or quality deficits during the onboarding period.
- Additional workload: for existing employees who have to take on extra tasks.
- Impact on corporate culture: Turnover can lead to dissatisfaction and uncertainty among remaining employees.
Employee turnover in industry comparison
Numerous factors, such as location, average employee age, retirement, or your company's industry, play a role in the turnover rate. While the average turnover rate in administration is around 10%, for example, seasonal working conditions in the hotel and catering industry lead to a turnover rate of more than 50%.
Calculate your turnover rate easily and for free here:
Effectively reducing turnover costs
Instead of spending vast amounts of money and working hours on new job postings, onboarding, and searching for employees, it makes more sense to find out where the shoe pinches in the existing team and what needs to be done to improve team morale!
The 360° software system PERSENTIS helps you find the right employees, boost loyalty and work enthusiasm, and reduce turnover costs. The key to this lies in measuring and understanding expectations and motives. This allows you to counteract potential resignations, reduce your company's turnover, and sensibly reinvest the resulting saved termination costs. For example, in your employees! Because: People move companies, not the other way around!
