The Costing of Labour Turnover

Much has been written about the causes and measurement of labour turnover, but less has been written about the costs involved. It is generally assumed that high rates of labour turnover will have harmful financial effects, without any serious attempt being made to quantify these effects. Sometimes it is considered that the costs involved in quantifying the costs will not justify the knowledge gained. Over the years, however, various methods for costing labour turnover have been suggested and used in specific examples. This article summarises the main methods suggested, and attempts to draw some conclusions as to their adequacy. No method yet devised has presented management with a simple but effective guide to labour turnover costs which can be applied in most situations.