Why You Should Care About the Cost of Turnover
The importance of upskilling the current workforce is paramount in today’s digital world. The pace of change is so rapid, the half-life of skills is about five years and employees are constantly looking for these growth opportunities. If they don’t find it at your company, they’ll certainly find it elsewhere. This pressure puts the onus on HR leaders and employers to fully commit to a culture of lifelong learning. Sometimes, though, it’s much easier said than done, especially when budget-conscious executives are concerned about the cost of upskilling employees.
To that end, the Economic Opportunities Program, part of the Aspen Institute, now offers a tool to help employers realize the cost of turnover. Jaime Fall, director of UpSkill America, also part of the Aspen Institute, says the tool was created because of a common refrain he heard from businesses.
“Employers want to invest in upskilling programs, but some have a hard time making the case without putting a real number on the cost of losing employees who don’t see opportunities for growth in their company,” says Fall.
The Cost of Turnover tool, simply put, is a calculator that helps employers estimate the cost of employee turnover. It has two sections, one for direct costs and the other for indirect costs. Direct costs of turnover are easier to calculate and quantify, but indirect costs, such as low employee morale, poor customer service and less productive employees, may be overlooked because it’s harder to nail down those numbers.
A few of the calculations the tool suggests for indirect costs include estimating the portion of shrink costs, safety costs and lost sales attributable to turnover in the last 12 months.
Before jumping in to collect data on the costs of turnover, recruiting and onboarding, the Economic Opportunities Program recommends that the following questions are answered first:
- What position or occupation do you want to calculate costs for?
- Who do you need to collect information from?
- Who in your organization has information about separation, hiring and onboarding procedures and costs?
- Who is the manager who can provide information about the effects of vacancy and procedures for onboarding new workers?
Fall says that the ultimate goal of this tool is to “arm HR leaders with the data they need to make the case for upskilling programs.”
Editor’s note: Be on the lookout for our April cover story, which takes a deeper dive into upskilling the workforce.