Havre Job Service Employers' Committee                                        Employer Resource Guide

# Turnover Cost Formula

High turnover can sabotage your company's bottom line. To estimate the cost of turnover in your firm, use the following formula.

Select a department or job function that has a lot of turnover. Use an actual number or, lacking exact statistics, estimate the number of people who left the job or department during the past 12 months. Write that number below on Line 4.

The average cost of turnover is 25 percent of an employee's annual salary (Line 1)' plus the cost of the benefits (Line 2) you provide. Typical benefits amount to about 30 percent of wages.* The total cost per employee (Line 3) is the total of Line 1 and Line 2. .

1.Annual wage: _____x .25 = ______

2.Annual wage: _____x .30 =______x .25 = ________

3. Total turnover cost per employee (add lines 1 & 2): ________

4.Total # of employees who left: ______

5. Total cost of turnover (multiply lines 3 & 4): ______________

Here’s an example

1.Annual wage: \$12,844 x .25= \$3,211

2.Annual wage: \$12,844 x.30=3,853.20 x.25= \$963.30

3.Total turnover cost per employee: \$3,211 + \$963.30 = \$4,174.30

4.Total number of employees who left: 5

5.Total cost of turn over: \$4,174.30 x 5 = \$20,871.50

* Total cost of a complete benefit package on top of payroll