Reward & Recognition ROI Calculator.
Replacing an employee is expensive; retaining one costs much less. A well-designed Reward & Recognition program can significantly reduce staff turnover.
Reward & Recognition ROI Calculator
Calculator assumptions
- Turnover cost is 50% of the average annual salary
- £25 per month, per employee, is invested into Reward & Recognition
- Investment reduces your turnover rate by just 15%.
High Staff Turnover Costs
It is generally estimated that the cost of replacing a salaried employee can amount to between six to nine months' worth of their salary. This estimate encompasses recruitment costs, training expenses for the new hire, and their salary - see below for more details.
Implementing a Recognition and Rewards (R&R) strategy as part of a broader employee benefits scheme significantly reduces turnover. Many companies observe lower employee turnover rates after introducing R&R initiatives. Recognition of contributions helps employees feel valued and acknowledged for their hard work.
Additionally, companies with strong R&R cultures attract higher quality talent. A Glassdoor survey in 2023 highlighted that 76% of job seekers consider a company’s culture and values important when applying for a job.
Further reading: Combatting High Staff Turnover: Strategies for Workplace Retention, What is Reward & Recognition (R&R)?
Employee Turnover Costs
Replacing a member of staff involves various costs that can be broadly categorised into direct and indirect costs. Here’s a detailed summary of these costs:
Direct Costs
Recruitment Costs
- Agency Fees: Payments to recruitment agencies to find suitable candidates.
- Job Advertising: Costs for placing job adverts on various platforms (e.g., job boards, social media, company website).
- Recruitment Software: Expenses for software used to manage the recruitment process.
- Background Checks: Costs for verifying candidate information (e.g., references, criminal record checks).
Interviewing Costs
- HR and Management Time: Time spent by HR and managers reviewing CVs, conducting interviews, and making hiring decisions.
- Assessment Tools: Costs for any assessment tests or tools used during the interview process.
- Travel Expenses: If candidates need to travel for interviews, reimbursing their travel expenses.
Onboarding Costs
- Training Materials: Costs for materials needed for training the new employee.
- Orientation Programs: Expenses for organising and conducting orientation sessions.
- Administrative Costs: Paperwork and administrative tasks associated with bringing a new employee on board (e.g., setting up payroll, benefits).
Indirect Costs
Lost Productivity
- Initial Training Period: Time taken for the new employee to reach full productivity.
- Impact on Team Performance: Decreased team performance as other team members may need to assist with training or cover the workload during the transition period.
Opportunity Costs
- Delayed Projects: Potential delays in projects due to the time taken to replace and train a new employee.
- Customer Service Impact: Possible decline in customer service quality during the transition period.
Employee Morale and Retention
- Impact on Team Morale: The departure and replacement of a team member can affect the morale and engagement of remaining employees.
- Increased Turnover: High turnover can lead to a cycle of continuous recruitment and training, further escalating costs.
Example Breakdown of Costs
- Recruitment Agency Fees: £3,000 – £5,000
- Job Advertising: £300 – £1,000
- Interviewing Costs:
- HR and Management Time: £1,000 – £2,000
- Assessment Tools: £200 – £500
- Onboarding Costs:
- Training Materials: £100 – £500
- Orientation Programs: £500 – £1,000
- Administrative Costs: £200 – £500
- Lost Productivity: Can vary widely but potentially 1-3 months of salary for the position being filled.
- Impact on Team Performance: Difficult to quantify but can significantly affect overall productivity and morale.
By understanding these costs, you can better prepare for the financial impact of staff turnover and implement strategies to minimise these expenses.
How can we help?
Don’t use this form if you are an employee and have a query about your account, gift cards, orders or anything else. Please contact us here.
Don’t use this form if you are an employee and have a query about your account, gift cards, orders or anything else. Please contact us here.
- 03300 242 281
- 2 Charlesworth Court, Knights Way, Battlefield Enterprise Park, Shrewsbury SY1 3AB
