When an employee leaves your organization, the financial impact extends far beyond the final paycheck. Most businesses only see the "hard costs" like job advertisements, but the "soft costs"—such as lost productivity and management time—often represent the largest portion of the total expense.
How We Calculate Turnover Costs
Our calculator uses a comprehensive formula that accounts for four primary factors:
Recruitment Costs: This includes the direct cost of job board postings and the value of time spent by HR and managers reviewing resumes and interviewing candidates.
Onboarding Costs: The cost of the new hire's time while they are training and not yet contributing, plus the cost of the trainer's time.
Ramp-up Productivity: A new employee typically operates at about 25-50% productivity during their first month. We calculate the portion of their salary paid for which no value was generated.
Knowledge Loss: While harder to quantify, the loss of institutional knowledge often results in temporary slowdowns for the remaining team.
Example Scenario
Consider a mid-level manager earning $75,000 annually. If you spend $1,000 on recruitment ads, 20 hours of management time interviewing, and the new hire takes 6 weeks to become fully efficient, the total cost often exceeds $15,000 to $20,000. This is why retention strategies are often more cost-effective than constant hiring.
Strategies to Reduce Turnover
To mitigate these costs, focus on improving the onboarding experience, providing clear career progression paths, and ensuring competitive compensation. Even a 5% reduction in turnover can save a medium-sized business hundreds of thousands of dollars annually.
function calculateTurnover() {
// Get values from inputs
var salary = parseFloat(document.getElementById('annualSalary').value) || 0;
var adSpend = parseFloat(document.getElementById('adSpend').value) || 0;
var interviewHours = parseFloat(document.getElementById('interviewHours').value) || 0;
var hrRate = parseFloat(document.getElementById('hrRate').value) || 0;
var trainingHours = parseFloat(document.getElementById('trainingHours').value) || 0;
var rampUpWeeks = parseFloat(document.getElementById('rampUpTime').value) || 0;
// Calculate hourly rate of the new hire (based on 2080 work hours per year)
var hireHourlyRate = salary / 2080;
var weeklySalary = salary / 52;
// 1. Hiring Costs
var hiringCost = adSpend + (interviewHours * hrRate);
// 2. Training Costs (New hire salary during training + trainer time assumed at hrRate)
var trainingCost = (trainingHours * hireHourlyRate) + (trainingHours * hrRate * 0.5);
// 3. Productivity Loss (Assuming 50% productivity during ramp-up weeks)
var productivityLoss = (weeklySalary * rampUpWeeks) * 0.5;
// Total Calculation
var totalCost = hiringCost + trainingCost + productivityLoss;
// Display results
document.getElementById('resultArea').style.display = 'block';
document.getElementById('totalCost').innerHTML = '$' + totalCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('breakdownHiring').innerHTML = '$' + hiringCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('breakdownTraining').innerHTML = '$' + trainingCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('breakdownProductivity').innerHTML = '$' + productivityLoss.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Scroll to results smoothly
document.getElementById('resultArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}