Let’s take back your salary budget.
Use the calculator below to estimate how much you could save.
Your estimated ROI will appear here
You could add 20.55% to your budget of $62,500,000 for 500 new hires.
Based on your numbers, you could save:
Try coming back when you start hiring more people.
Curious how we came up with that number?
We’d love to tell you all about it. And if you’re looking to scale sustainably, we’re confident you’ll take something valuable away from the call.
Here’s the math behind the estimate:
To start, focus on the two biggest people expenses: turnover and ramp-up time.
To get those, 3 numbers matter: the average annual salary, the number of employees you replace, and the number of additional new hires.
We’ll also need to make two educated guesses: The replacement cost for each lost employees, and the ramp-up cost for each new one.
Let’s look at an example: a 50-person organization with 16% annual turnover adding 10 people over the next year with a $70,000 average annual salary.
Cost of Turnover
Let’s assume a replacement cost of 9 months’ salary, or 75% of base.
At 16% annual turnover the organization can expect to lose about 9 employees over the next year. At a cost/hire of $52,500, turnover costs $472,500 annually.
Cutting turnover by 25% would save $118,125.
Cost of Ramp-up
Let’s assume an average cost to productivity of 50% wasted time over 6 months.
Adding in 9 replacement heads, a total of 19 new employees will join in the next year. With 4 weeks paid vacation, the average salary is $1,458/week. That’s a cost/hire of $17,500, or $332,500 annually for 19 new hires.
Cutting ramp-up time by 25% would save $83,125.
ROI in Additional Hires
Together, the turnover and ramp-up savings total $201,250. That’s a 28.75% increase in the salary budget of $700,000, enough for 2 additional hires.
Want to learn more?
“One-third of approximately 1,000 respondents to a February 2014 survey said they had quit a job within six months.”
Society for Human Resource Management, Apr. 16, 2015
“The estimates of the cost of turnover in the 30 case studies analyzed here range from 5.8%
up to 213%, depending on the job and skills.”
Center for American Progress, Nov. 16, 2012
“51% of employees say they are actively looking for a new job or watching for openings, and 35% report changing jobs within the past three years.”
Gallup, Feb. 22, 2017
Let’s talk about how we can help cut turnover and ramp-up on your team.
If you’re losing sleep over scaling your team, we can help. Get in touch now, and take the first step towards a better night’s rest.