Figuring the cost of turnover is an inexact science at best. Inexact, but not impossible.

You’ve probably gone through enough replacement/hiring scenarios to know the drill pretty well. Still, it’s worthwhile to take a look at the typical process to see just what’s involved and whether you’re overlooking anything when you make your own list. Here’s a rundown from Penny Morey, an HR consultant who contributes to entrepreneur.com:

• Separation processing:
  exit interviewer’s time
  departing employee’s time
  administrative functions relating to the departure
  separation pay associated with the departure
  unemployment tax related to the departure
• Replacement hiring:
  attracting applicants
  pre-employment administrative expenses
  entrance interviews
  aptitude, skill, drug etc. testing
  hiring decisions meetings
  post employment physical exams
  post-employment information gathering (records, payroll, etc.)
  signing bonus
  employee finder’s fee
• Training new hire:
  information literature (manuals, brochures, policies, etc.)
  general orientation
  job orientation
• Lost productivity and lost business:
  additional overtime to cover the vacancy wages and benefits saved due to the vacancy
  performance differential while new employee gets up to speed
  low morale-related time wasted due to “water cooler grumbling”
  lost customers, sales, profits due to the departure

What’s all that cost? Estimates by Morey and the Society for Human Resource Management set the price at 38% of the departing employee’s salary.

Tags: entrepreneur.com, penny morey, Society for Human Resources, Training, turnover, unemployment