Calculating the Cost of Turnover for a Position

By Posted July 15th, 2014

TurnoverEveryone knows that turnover of key employees has a financial impact on an organization. But did you know that there is a real formula that you could use to monetize how much it costs your organization to lose a specific position?  Thanks to the folks at Kepner Trego Inc. and the Saratoga Institute, there is a simple formula to put in use.

Start by identifying a position in your organization that experiences a lot of turnover.  One of the highest turnover positions is a fast food chain store manager.  We will use that for an example.

Start by inserting the Annual Wage on Line 1 and then multiple it by 130 to include benefits costs (Line 2).  Next, multiply the derived total wage (Line 3) by 25% (line 4).  You then take the resulting number in Line 5 and multiply it by the number of ex-employees who previously held the position (Line 6) to identify your turnover cost for that Position in Line 7.

Now, if only I had a reporting solution in SAP to do this for me …