Costs of employee turnover

Abstract

The aim of this paper is to establish a general methodology for calculating the costs incurred by employee turnover. This paper deals with identification of costs incurred by the departure of an employee, and does not deal with the cost of recruitment of a new employee. Economic calculations are adjusted to the tax policy in the Czech Republic. The costs of employee turnover (according to Bliss, 2012) include the costs of substitution of the unoccupied position, costs of conducting the exit interview and termination of the contract. The cost of an executive’s time to understand the causes of leaving and costs of the leaving employee’s training were also determined. Important factors in the costs of employee turnover also include the loss of knowledge and possibly also a loss of customers. Costs of lost employee and department productiveness represent an important part of the costs of employee turnover, as well. For all of these costs there have been proposed general calculations formulas.