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Cost of Termination
It takes considerable staff time to process out an employee. The
processing usually takes a few hours to collect badges, keys and company
equipment. The person has to be taken off of payroll and off of company security
lists. There are often benefit program extensions. The typical
Cost of Termination is often between $1000 and $1500. Calculate your
actual cost of termination below:
-
Final paycheck, vacation and separation pay $__________
- Increases in unemployment tax
$__________
- Continued benefits costs
$__________
- Administrative costs for processing the termination:
benefits; unemployment, Payroll, exit interviews
$__________
- Exit interviews, transition meetings
$__________
Total Cost of Termination
$__________
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Cost of Replacement
Usually, the departing employee
has to be replaced. The average cost of hiring and orientation for a
non-exempt employee was about $1,100
(Saratoga Institute - 1999 Human
Resource Financial Report)>. The
average cost of hiring and orientation for an exempt employee was about $9,000 (Saratoga Institute).
The Cost of Replacement figures will vary from one company to another.
Calculate your actual replacement costs below:
- Advertising, job postings and recruiter fees
$__________
- Interview expenses
$__________
- Company marketing materials consumed
$__________
- Pre-employment Assessments
$__________
- Background checks, criminal, references, education, credit etc.
$__________
- Medical exams and drug tests
$__________
- Interim employee costs (temps, contract workers)
$__________
- Overtime costs
$__________
- Relocation expenses and salary
$__________
- Resume screening
$__________
- Interviews: first, second, third
$__________
- Orientation and training program costs
$__________
- Coaching costs
$__________
Total Cost of Replacement $__________
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Cost of Vacancy
Assuming that a job adds value,
your company will experience a loss of revenue for every day your position is
vacant. The amount of loss depends on the position. You can
calculate the Cost of Vacancy as follows:
- Take the total annual
company revenue per employee and divide it by the number of workdays in the year
(usually about 240 to 250).
- Multiply this number by the number of workdays
that the job is vacant.
- Subtract the cost of pay and benefits for those
workdays since they were not paid out.
Total Cost of Vacancy $__________
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Learning Curve
Productivity LossA new employee is usually not as
productive as the departing employee. The new employee doesn't know the company's
ropes and resources. There is an observable
loss of productivity until the new person's productivity matches the departing
person's. The minimum loss is usually about three
to six months pay and benefits for exempt employees and about twelve months pay
and benefits for a non-exempt employee
(Saratoga Institute). The cost
of replacing a salesperson or a manager is often far greater than the turnover
cost of a non-exempt employee. Which of the following costs are observable
in your company:
Missed deadlines and
opportunities
$__________
Lower morale
$__________
Customer problems not resolved
$__________
Lost leads or customers
$__________
Disrupted workflow process
$__________
Direct impact turnover
$__________
Total Learning Curve Productivity
Loss $__________
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