Benefits Of Employee Turnover Cost Essay

8929 WordsAug 1, 201636 Pages
Employee turnover cost is usually defined as the cost to hire a replacement associate and train this new employee for the new role. Most of the time the cost for training is considering the list of activities and/or courses that a new associate should undertake in order to become productive. Figure 5 is showing the cost and Return Of Investment process during the employee`s work time. The ROI or potential revenue (in the specific case we will consider Productivity and Quality since it is an R&D lab and it is not directly generating any revenue), are generated after a period of time. Figure 5: ROI estimation process for a new hired employee However the cost for training should have a different aim, we should calculate the cost required to get the new associates to the productivity level of the one who left. These costs cover both direct costs like the commissions paid to a Head Hunters recruitment companies to screen and identify the right candidate as well as indirect costs that the company might incur such as the opportunity cost which will be explored later on in this thesis. Generally, the higher your turnover rate, the higher both your direct and indirect costs will be. And as the turnover rate increases, the costs will increase faster. Hiring Costs There are indirect and direct costs associated with turnover and consequent employee substitution. However attrition might lead to a certain saving in some extend which is more related to economy of scale, in other words

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