Monday, February 4, 2008

Attrition Cost

Attrition Costs One of the best methods for calculating the cost of turnover takes into account expenses involved to replace an employee leaving an organization. These expenses are:
A. Recruitment cost The cost to the business when hiring new employees includes the following six factors plus 10 percent for incidentals such as background screening:

*Time spent on sourcing replacement
*Time spent on recruitment and selection
*Travel expenses, if any
*Re-location costs, if any n Training/ramp-up time
*Background/reference screening
B. Training and development cost To estimate the cost of training and developing new employees, cost of new hires must be taken into consideration. This will mean direct and indirect costs, and can be largely classified under the following heads:

*Training materials
*Employee benefits
*Trainers’ Time
C. Administration cost
They include:

*Set up communication systems
*Add employees to the HR system
*Set up the new hire’s workspace
*Set up ID-cards, access cards, etc.

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