Cost of Employee Turnover

Employees come and go for a variety of reasons – and understanding the financial impact of employee turnover is essential as organizations work to achieve their missions.

For most nonprofit organizations, personnel costs (salary, benefits, training, equipment, etc.) often make up the single largest expense line in their operating budgets. And for EVERY nonprofit, human capital (our staff and volunteers) is without question our greatest asset.

While many organizations are aware of the costs associated with their personnel, many are not considering the costs associated with employee turnover. Understanding these direct and in-direct costs is an incredibly important planning tool that nonprofit managers can use when creating scenario plans and determining hiring strategies.

In addition to the hard and soft costs outlined in this process, you also have to consider the “opportunity costs”. In other words, what did your organization NOT accomplish because of the time involved with filling the vacancy. Although opportunity costs are not included in the calculator, they should most certainly be considered when reflecting on your hiring practices.

Remember: Hiring top talent who are well-prepared and committed to nonprofit careers is always the best, most cost-effective human resource strategy.

The fine print: The Cost-of-Turnover Calculator© is designed to calculate the costs associated with a departing employee, including the costs involved with filling the vacancy. It is interactive to allow each user to input data specific to the organization and individual/position being evaluated. The calculator requires you to have access to certain personnel information specific to the position. The results are based on a unique, proprietary set of formulas.

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