Measuring employee turnover: managing costs for frontline workers

WorkStep recently introduced our Cost of Turnover Calculator that allows you to easily calculate what the true cost of a turnover event is for your supply chain company, per turnover event, for any role or location. The calculator takes you through a series of inputs including sourcing expenses, onboarding costs, employee efficiency, and additional costs.

We tried to make this tool as intuitive as possible to make determining the actual cost of turnover simple. There are several calculations happening in the background based on these inputs, so we wanted to walk you through how each section is calculated, as well as your results page, to ensure you get the most out of this information.

Ready to reduce frontline worker turnover costs and improve retention rates? WorkStep’s employee retention software can help you achieve your goals with advanced features and tools designed for today’s modern workforce.

Cost of labor

Once you click through to our Cost of Turnover Calculator, you’ll see the first three questions ask you for the annual salary of the HR manager, hiring manager, and the training manager. Once you provide those values, the calculator will automatically convert them into an hourly rate to include in the cost of hours spent on onboarding a new hire. This helps determine the cost of time spent on screening and interviewing the candidate, as well as administrative costs and training per hire.

If uncertain of what the cost of these roles are at your company, a simple Google search can lead you to the average for the industry.

Additionally, we have included a line item to input the cost of having to temporarily fill the open position by another worker. As we all know, the job still needs to be done. For this calculation, we are calculating the amount of time the role is empty for, and the cost to cover the role temporarily at time and a half by an existing employee. This could be one of your biggest costs.

Cost of benefits and hiring incentives

For roles that include benefits such as dental, medical, and vision a company is contributing money for each worker per hour. This is a significant cost to employers and should be included when determining your cost of turnover. The amount for each company will vary, but the industry average is around $2.83. Users can input their own data as needed.

Other perks, like hiring incentives (bonuses, tuition reimbursement, etc.) may be a new expense for a company as a way to stay competitive in a tight labor market. These line items  shouldn’t be overlooked when determining what a turnover event costs. Our tool asks for you to include what is spent per hire, but if you don’t know, the average is $1,200.

Talent sourcing expenses

It takes time and resources to find the best candidates to fill a role. This includes advertising the open positions on job boards, other platforms, or even using an agency. Many companies also provide referral bonuses to employees if the person they suggest is hired. WorkStep’s Cost of Turnover Calculator asks for the amount this costs per hire, or provides the industry average of $1,250.

Efficiency during  employee ramp-up and onboarding

As you near the end of the calculator questions, you’ll find a couple based around employee efficiency. One asks you to include how many days it takes for a new worker to be 100% efficient, meaning they have completed training and can work independently.

The next asks how efficient an employee is during their ramp period (onboarding and training). This is the percentage they are able to be productive during this time. The productivity cost per hire is determined by taking this percentage and multiplying it by the worker’s pay and the number of ramp-up days.

Ready to calculate your employee turnover costs?

Click here to access the calculator. Remember, you can complete it as many times as you wish for different roles by different locations. Here are some useful resources you might want to check out while calculating your true cost of turnover:

1. Infographic – Your guide to using WorkStep’s Turnover Calculator
2. WorkStep RETAIN overview document
3. Infographic – How to interpret your Total Cost of Turnover results