| Step 1: Evaluating the Cost of Replacing One Employee |
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| A. | Average employee's annual salary including benefit package | $ |
| B. | Estimated Replacement Cost Percentage (25%, 50%, etc.) of employee's total annual salary* | % |
| *Each Replacement Cost Percentage will vary. Factors affecting this variance include the complexity, seniority & profile of the position, educational requirements, orientation requirements, relocation expenses, etc. Try different Replacement Cost Percentages to better understand the variable cost of replacing employees from different levels. |
| C. | Cost of replacing one employee (A x B) |
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| Step 2: Determining Annual Replacement Cost |
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| D. | Annual Employee Turnover (Total number of employees leaving annually) | |
| E. | Annual Replacement Cost of employee turnover (C x D) |
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| Step 3: Advantages of Reducing Employee Turnover |
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| Next try a different number for Annual Employee Turnover (D) to better understand the financial benefits of retaining quality employees. |
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