Many companies neglect to quantify the cost of a bad hire and so they go on thinking it isn’t costing them hundreds of thousands of dollars. Part of why this happens is because there is no line item on a profit and loss statement for turnover. The Department of Labor provides a bare bones calculation (see graphic above) which estimates that if an employee leaves your company within just the first 90 days, your cost of turnover equates to 30% of their annualized salary plus 30% of whatever you would have paid them in benefits.
For example, if you have an hourly worker making $15 an hour who is terminated, your turnover cost is $10,000! Imagine how costly it is to lose an executive or manager! But there are many other factors to consider in order to calculate the true cost of turnover in your organization.
Ready to find out what it actually costs you to hire a sales person, for example? Read more