Employment Testing Blog & Updates

Top 3 Employee Turnover Costs: Part 1-Separation Costs

Posted by EmployTest - on Mon, Mar 1, 2010 @ 10:29 AM

This is the first of four posts diving into the topic of employee turnover costs. 

A large part for hiring managers to consider the various costs can be involved if they make a hiring error.   But of course we hope that readers will implement some type of pre-employment testing system to help reduce these costs.  

The first category of employee turnover costs is "Separation Costs".  These are the costs that are most likely overlooked when considering employee turnover.

Remember all of those staff meetings (formal and informal) that were involved when you last terminated an employee?  What about the disciplinary meetings between your team and the employee in question?  Add together the collective time (hours, days?) spent on these discussions and mulitply by an hourly rate.  This is the first step in determing these turnover costs.

Or perhaps it was a voluntary separation by the employee.  In that case, what is the cost of the exit interview (if one occured)?  Include your time and the employee's time as well, as well as any post interview analysis and reporting on your side.

Then include any payouts of sick and vacation time, if applicable. 

Cost of removing from payroll system? 

Unemployment benefits? 

Severance, if any?

Are there other costs in your organization when an employee separates voluntarily or involuntarily?    What are we missing here?

As you see, it adds up quickly.  In the next two blog posts, we will cover aspects of the other two employee turnover costs, recruitment costs and training costs, to get a complete picture how expensive turnover really is.


Would you like a sample of our pre-employment tests?  Just visit Try a Test to get started!

Tags: turnover costs, pre-employment testing