1. Using Tools for Putting
A Cost on Turnover
Dick Finnegan
Founder, Retention Institute
Copyright Retention Institute 20010
All rights reserved
1

2. Finnegan Background
CEO of C-Suite Analytics; solved turnover across 6 continents including
Siberian bankers, African gold mines and the CIA
Author of “Rethinking Retention in Good
Times and Bad”, per BusinessWeek “offers
fresh thinking for solving the turnover
problem in any economy”
Author of “The Power of Stay Interviews for Engagement and Retention”,
published by SHRM 2011
Noted employee retention expert by BusinessWeek, Chief Executive
Magazine, Consulting Magazine, and HR Excellence Center of China
2

3. How Important is Calculating
Turnover’s Cost?
Turnover is typically reported in #s and %s, whereas
reporting turnover costs and retention savings in $s
generates more:
 Urgency
 Accountability
 ACTION…
and action is required by HR, top management,
operations, finance, and others to improve retention
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4. Finance Must Own Turnover Costing
and Reporting Because…
1. Finance is qualified to conduct all complex financial analyses for
your company
3. Finance brings credibility and authority to your retention initiative
5. Finance reports important metrics to your board and executive
team
HR might track and analyze retention data but ideally only Finance
should place a cost on turnover and report it
Finance brings AUTHORITY! Once Finance realizes the $ cost of
turnover, your company’s CFO will encourage your CEO to
elevate retention’s importance and establish retention goals top to
bottom, to the first-line supervisor level
4

5. Which Jobs Should You Measure?
Clues to consider:
 If your intiative is for your total company or a division, are
there one or two dominant jobs that will receive most of your
focus? If so, you might limit your initiative and your cost study to
these jobs
 If your initiative is for your total company or a division but
covers a variety of jobs, can you combine these jobs into groups
based on pay and estimated replacement cost and conduct one
cost study for each group?
 If your initiative is for one or two jobs only, conduct your cost
study for just these jobs
5

6. Measuring “Lost Productivity” Matters Most
Turnover cost calculators typically measure direct costs in categories such as
“separation”, “vacancy”, “acquisition”, and “placement”…and indirect
costs such as “lost productivity”
“Lost productivity” measures how much work doesn’t get done and often times
costs more than all other categories combined and might include:
 Incomplete work such as products not built, calls with increased hold
times, medications delivered off schedule
 Reduced quality such as items returned, customer complaints, re-doing
work
 Lost customers who move to a competitor, leave long lines rather than buy,
or follow your ex-employee to their new company
Measuring “lost productivity” is art more than science and will never be
completely accurate. The calculator at TheRetentionFirm.com offers a
creative way to determine a good estimate of lost productivity’s cost
6

7. Free Turnover Cost Calculators
These calculators are among the best available on the web. The first
two apply to any job and the remaining ones are for specific jobs in
specific industries. Some require registration. Check your
professional association to see if they have one for your industry
 The TalentKeepers Cost Calculator http://www.TheRetentionFirm.com/
 Wyoming Department of Workforce Services
http://www.wyomingworkforce.org/resources/tools_turnover.aspx
 TopMark LLC sales calculator http://www.top-mark.com/turnover_cost_calculator.htm
 Cornell University’s School of Hotel Administration
http://www.hotelschool.cornell.edu/research/chr/, then click “Cornell Hospitality
Tools”, then “Turnover Cost Evaluator”
 National Commission on Teaching and America’s Future
http://www.nctaf.org/resources/teacher_cost_calculator/school_calc_sdp.asp
 Trinicon Group Cost Worksheet for truck drivers
http://www.trincon.com/resources/cost-calculator
7

8. Build Momentum With Data
Cost data has no value if it is announced once and then filed away.
Once again, Finance brings authority to these announcements.
Consider the following real-life examples that companies have used
to leverage this data to drive behaviors:
 A $10,000 employee company found that each 1% of turnover cost or saved
$366,000
 A major hotel chain that was spending $350 million on turnover projected
that by cutting turnover in half their stock price would increase by nearly 25%
 Another study reported that turnover costs represent more than 12% of pre-
tax income for the average company but those companies with high turnover
lose nearly 40% of earnings
So identify ways with Finance that you can leverage your turnover
cost data to stimulate commitment to reduce turnover among your
top-to-bottom management team
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9. Costing by Job Group
The next slide provides a format example for calculating and reporting
turnover’s cost by job group. This example is for a rural, 100-bed hospital.
You will see:
 All job titles have been collapsed into 5 groups, with each group
representing jobs that are similar in pay and replacement costs
 The turnover cost for these groups can now be used to both report
cost for each group and the total hospital
 Comparing cost by job group directs us to which group deserves
our first attention; in this case we learn that the cost for nurse
turnover accounts for 71% of the total turnover cost for this hospital
and should therefore be the first area addressed
The formula for this calculation is to divide the total annual nurse
turnover cost by the total hospital annual turnover cost…3,846,882 ÷
5,402,801 = .71 or 71%
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10. Job Group Example Job Cost/Exit Exits/Year Cost/Year
Non-skilled Nurses aid $7,273 20 $145,460
Skilled hourly Phlebotomist 11,825 30 354,750
Licensed Rehab 20, 429 21 429,009
hourly therapist
Nurses Surgical 49, 319 78 3,846,882
nurses
Management All top 52,225 12 626,700
managers
Total Cost/Yr $5,402,801
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11. Put Cost Data to Work
Competitive Advantage:
Only 33% of U.S. organizations place a cost on employee turnover,
and this number decreases to 18% around the world. Fewer leverage
it in ways discussed in here, so developing this data and using it to
improve retention is a clear competitive advantage
Next Up - Retention Goals:
Armed with data and Finance at your side, your path becomes clear to
approach top management to set retention goals for your targeted
area as well as for all managers and supervisors who work there
11

12. Introducing The CERP Program
Certificate of Completion
is hereby granted to:
Kristin Scott
to certify that this person has completed all the requirements
of the Certified Employee Retention Professional Program
and has earned the CERP distinction
Granted: June 7, 2011
Richard P. Finnegan, Founder
www.c-suiteanalytics.com 12

13. Certfied Employee Retention
Professional program (CERP) is an
applied certification program based on the
Rethinking Retention Modelsm
 Stay-at-Home: All tools are delivered to
individuals online but are offered here
for group participation with direct
facilitation by Founder Dick Finnegan
 Development: A developmental
opportunity for an HR or Operations
leader who can earn up to 26 SHRM
re-certification credits
 Completion time is 3-6 months
www.c-suiteanalytics.com 13

14. 26 SHRM Credits!
www.c-suiteanalytics.com 14

15. 6 CERP Modules
Module #1: Building Blocks Module #4: Narrow the Front Door
Executive Sponsor Hiring Those Who Stay
Organizational Areas Check Progress
Turnover Cost Study
Module #2: Operationalizing Module #5: Script the First 90 Days
Retention Tipping point
Retention Goal-Setting Onboarding
Exit Surveys
Module #6: Challenge Policies
Module #3: Tool Building Policy Review
Employee Value Proposition Strategic Benefits
Employment Branding
Will Include Stay Interviews!
Trust Building “The Power of Stay Interviews for
Engagement and Retention”, SHRM, 2011
www.c-suiteanalytics.com 15

16. After A Few Months With The CERP Program…
• BOST Healthcare reduced
turnover by 38% and is on track to
save $180,000 this year
• Burcham Hills Retirement
Community reduced turnover
72% and is retaining 100% of new
nurses for at least 6 months
www.c-suiteanalytics.com 16

17. The Certified Employee Retention
Professional Program
Certificate of Completion
is hereby granted to:
Kristin Scott
to certify that this person has completed all the requirements
of the Certified Employee Retention Professional Program
and has earned the CERP distinction
Granted: June 7, 2011
Richard P. Finnegan, Founder
Dick Finnegan
407.772.2710
DFinnegan@RetentionInstitute.com
www.c-suiteanalytics.com 17