Employee Turnover is costing your firm hundreds of thousands of dollars but it's masked in a myriad of different ledger accounts and departments. Finding out the true expenses associated with turnover allows firms to control those expenses and train those responsible for them to better understand their impact and reduce those costs.

1. Why Your Organization Needs
An Employee Turnover Audit
The cost of employee turnover is staggeringly higher than you
may think
Presented by
Ron Haynes, MBA

2. Source: http://www.compensationforce.com/2014/02/2013-turnover-rates-by-industry.html
Voluntary Involuntary Total
All Industries 10.4% 4.7% 15.1%
Banking & Finance 12.8% 4.4% 17.2%
Healthcare 12.5% 4.3% 16.8%
Hospitality 18.2% 11.1% 29.3%
Insurance 6.8% 3.6% 10.4%
Manufacturing & Distribution 8.4% 4.9% 13.3%
Non-Profits 11.0% 4.3% 15.3%
Services 11.0% 4.2% 15.2%
Utilities 5.2% 2% 7.2%

4. The higher turnover rate in 2008
was due primarily to an economy
in turmoil and downturn.
The higher (and growing) turnover rate
for today is due to more companies
hiring.
They’re looking for experienced workers who know how to
control expenses, understand the importance of customer
retention, and know how to grow market share.

5. In a 100 person company, on average you had to replace 15
people. Eleven quit on their own and you had to fire four.
How much did that cost your organization in money, time, lost
customers, lost productivity, lost knowledge, or loss of morale?

6. Using US National Averages:
At $50,000 per year, those 15 employees cost
your organization approximately
$675,000

7. Consider:
• As the economy emerges from a recessionary
environment, employees are more willing to leave the
comfort of one job or position in favor of another.
• Employers need to fill these vacancies, however they want
to find the best employee at a reasonable expense.
• The best and most talented employees will be highly
sought after and CareerBuilder says that 75% of your top
employees are currently looking for a better opportunity.

8. How Your Employee Turnover Rate is Calculated:
Number of Separations During Time Period
Average # of Employees During Time Period
X 100
Key Point:
nover that exceeds your industry’s average should be considered preventa

9. Some Employee Turnover is natural and cannot be prevented.
Sometimes people just have a need to “move on.”
What’s not natural is an organization with turnover far exceeding
the industry average.
Blue = industry avg.
Red = excess
Black = remaining
employees

10. Example:
You run a mid-size business with 500 employees and last
year your Employee Turnover Rate indicated that 35
employees voluntarily terminated above the national
average for your industry.
That could mean your company experienced between
$1,300,000 and $1,800,000 in unnecessary expenses.
Those expenses came directly off your bottom line.

11. Real Life Example:
District Manager making $70,000/yr replaced with a $75,000/yr
employee. Same perks, same benefits. Position open eight
weeks.
Separation Expenses: $80,702
Replacement Expenses: $44,848
Post-Hire Expenses: $19,571
Total Cost to Replace?
$145,121

12. Real Life Example:
Store Manager making $40,000/yr replaced with a $42,500/yr
employee. Same perks, same benefits. Position open two weeks.
Separation Expenses: $14,944
Replacement Expenses: $13,766
Post-Hire Expenses: $13,017
Total Cost to Replace?
$41,727

13. • Cost of covering the vacant position by the manager.
• Cost of covering the vacant position by other employees.
• Relocation expenses.
• How many people were interviewed that were not hired? There are
expenses there, too.
• Administrative expenses.
• Human Resources expenses.
• IT Department expenses.
• Productivity loss.
• Customer retention or loss.
l examine over 130 expenses associated with emp

14. But all these expenses are already on our books. Why
do we need to identify them by position?
Imagine your company has an East Region and a West Region.
The East Region is frugal, smart with their expense accounts, and
has generated a 10% sales increase.
The West Region has also generated a 10% sales increase but
their expenses are out of control and are 150% higher than the
East’s.
Which region is doing a better job?
Should their rewards be the same?
Can you justify the difference? … How?

15. An Example:
One District Manager was creating a significant amount of
unnecessary voluntary employee turnover due primarily to
his management style. Despite a year of coaching, he refused to
alter his attitude and his district turnover was still very high.
Executive management decided to charge his P&L with the
turnover expenses which lowered his year-end bonus a great
deal.
He got the message. Coaching began to make a difference once
he “saw the light.”

16. You can’t manage what
you don’t measure.

17. An empty office is an
UNPRODUCTIVE
office.
Does your Human Resources
director know the full cost
of this empty chair?
Do you?

18. “For a company with 10,000 employees,
turnover costs for entry-level workers, alone,
could reach $17.3 million.” - Bloomberg
Source: http://www.bna.com/retaining-workers-2014-n17179881224/
At only $1,730 per worker, you already
know that number is GROSSLY understated.

19. Not a lot.
We’ve completed an audit in 25 minutes and we’ve taken as long
as three hours. More co-operation means less time.
The more complicated the position, the more time it will require
to gather the necessary data to complete the audit accurately.
The good news:
Once we have the data,
the next audit can be completed quickly.

20. • Various salaries or hourly rates for the employees
involved
• Hiring processes and expenses
• Generally some additional information from someone on
the executive team
Confidentiality is 100% Guaranteed

21. • Business leaders who want to lower their employee turnover
expenses. You can’t lower them if you don’t know what they
are.
• Consultants who work with organizations to lower employee
turnover expenses.
• Human Resources directors who can authorize expenditures
to uncover these expenses.

22. For $395 you’ll get a customized report showing the cost
of a single position’s turnover expenses, broken down
into Separation Costs, Replacement Costs, and Post-Hire
Costs. Additional positions are discounted by 15%.
You’ll also get information on practical talent retention
strategies to help you keep your top employees.
Everything can be conducted by email or phone call.

23. Contact:
Ron Haynes
870-761-7881
ron.haynes_mba@yahoo.com