Wednesday, November 29, 2023

Cost of Turnover Calculator for Business by The Aspen Institute is Good for Cost of School & District Takeover

Thanks to University of Wisconsin Professor AnjalĂ© Welton for helping me locate this Aspen Institute Toolkit on the cost of turnover in business. It strikes me that in this moment of school and district takeovers, that districts ought to prepare themselves and working closely with their legislators to calculate the real cost of such takeovers—also so that the public can be informed on such matters, ideally, of course, before this happens.

This published business tool by The Aspen Institute maps on fairly well in educational contexts. It doesn't capture, of course, all the grief, anger, and trauma as a real cost that we're witnessing right now in the Houston Independent School District after having gotten taken over by the Texas Education Agency. It is nevertheless helpful since folks across the political spectrum do tend to pay attention to money and finances.

-Angela Valenzuela






Cost of Turnover Tool Make the business case to improve retention through upskilling and stability 

March 2019

This Cost of Turnover Tool is a simple, “back of the envelope” calculator to help you estimate how much it costs your business to replace staff. The goal is to reasonably indicate the financial impact of turnover on your company. Some turnover costs – what we’ve called the direct cost of turnover – can typically be calculated using data collected as part of regular firm operations. Other turnover impacts like lower employee morale or poorer customer service – what we’ve called the indirect cost of turnover – are more difficult to quantify, but equally important to consider when assessing the financial impact that turnover may have on your business. Different industries experience turnover in different ways. For example, while a manufacturing firm may engage a staffing agency to hire temporary workers, a retailer is more likely to rely on a fleet of hourly workers who can quickly fill shifts. But a retail business may have longer lines and higher shrink when turnover spikes. This tool allows you to pick the expenses relevant to your organization, and calculate annual cost of turnover by estimating a few costs and using simple calculations. This information can help you make the case for investing in upskilling and other strategies to improve retention. This tool was developed jointly by UpSkill America and Reimagine Retail. To learn more about our work, visit as.pn/upskill and as.pn/reimagineretail.

Getting Started 

To use the tool, you will need to collect some data on the costs of separation associated with losing a worker and of recruiting and onboarding a new employee to work productively. To help collect this information, you should answer the following questions before you start. 

- 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 for this position?

Direct Cost of Turnover 

A. Estimate separation costs for 1 worker 

- Separation pay 

- Time of HR and other staff to process separation, including participating in exit interview 

B. Estimate daily vacancy costs for 1 worker

 - Typical daily overtime wages for employee(s) that fill in to cover vacant shift 

- Typical daily staffing agency cost for a temporary worker that exceeds the typical daily wage 

- Estimated lost sales from no-shows 

C. Estimate typical number of days to replace a worker 

D. CALCULATE: Total vacancy costs for 1 worker 

- Multiply daily vacancy costs (B) by days to replace a worker (C) 

E. Estimate recruitment/screening costs for 1 worker 

- Prorated cost of advertising the position 

- Prorated share of fees paid to recruiting services 

- Costs of screening and interviewing the typical number of applicants. For example: 

- Time spent reviewing applications and scheduling and conducting interviews 

- Cost of pre-employment testing; staff time to administer 

- Cost of drug screen or other background checks; include staff time to coordinate 

- Hiring bonus or incentive


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