Some Real Numbers on the Cost of Turnover

Some Real Numbers on the Cost of Turnover

Employee turnover is an issue that lingers as a serious negative impactor on productivity in most workplaces. Research studies have consistently shown that turnover in North America ranges between 25% and 30% on the average. Prior to the current recession, the latest US Labor Department statistics showed a range from 13.5% for educational services to 58.4% for accommodation and food services.

With estimates for the true cost of turnover ranging from 25% for entry level jobs to 250% of annual salary for senior management, it’s not rocket science to realize that this can’t continue.

A new study from the Canadian Grocery Human Resource Council (CGHRC) takes the analysis a little further. In this study, conducted across the grocery industry in 2008, and released in April 2010, they found that:

  • Participants reported an overall employee turnover rate of 38.7%, with an average voluntary turnover rate of 31.7%.
  • The reported turnover rate was highest for part-time non-management staff (64.9%).
  • Facilities located in urban areas experienced a higher rate of overall turnover (40.2%) than those in rural locations (28.1%).
  • Turnover varied with the type of ownership structure: the rate was highest for chain facilities (40.9%), followed by independent facilities (31.8%) and franchises (27.2%).
  • The size of operation did not appear to influence the rate of turnover

They went further in their study to take a look at the cost of turnover for one of the most basic positions in a grocery store – front line, part time grocery clerk. Their findings. across a statistically significant sample, was an average cost of $1,300.

Now $1,300 doesn’t really sound like a lot of money but it does become significant when you are facing a turnover rate of 31.7% to 38.7%. Further, to put that $1,300 figure into perspective they performed an impact analysis of store sales to recover that cost – what they found should give us all pause for thought.

  • If a store’s net margin is between 2% and 4%, the store has to sell between $32,500 and $65,000 in groceries to recover that cost.

The study concluded that turnover should be defined as “an expense without an invoice”