Hess Associates

The Dollar Cost of Employee Turnover

Employee turnover has a surprisingly high cost, yet very little is being done to contain and/or reduce this expense – something which can significantly increase corporate profits.

Assumptions:
• Turnover in general in Canadian corporations is ~ 7%
• Turnover of full time staff in the retail sector is ~ 15%
• Turnover of temp workers in the retail sector can be as high as ~ 65%
• Many positions do not have a clear growth path so little incentive for loyalty
• Many corporations do not provide training and education to enhance performance
• Employee contributions are largely unrecognized and unrewarded
• 1 HR specialist is required in order to hire 100 – 150 new full time people per year
• 3 to 5 training days per person, requiring the trainee and the trainer’s time
• Severance can be several thousand dollars per full time person
• Cost / effort to hire and train temp similar to full time workers minus severance

TURNOVER COST ($)

Turnover Rate—————Number of Employees
——– ———-1000—————-5000————–25000
15%———–400,000————-2,000,000———10,000,000
25%———–667,000————-3,335,000———16,675,000
35%———–933,000————-4,665,000———23,325,000

Conclusions:
Some of Canada’a largest corporations such as Loblaws, the Bay, Sears, Wal-Mart, Canadian tire, Shopper’s Drug Mart, etc. have more than double the number of employees shown above.
Can these onerous costs continue to be ignored?

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