Analysis of High Turnover Rate Essay

This essay has a total of 1743 words and 9 pages.

Analysis of High Turnover Rate

Analysis of High Turnover Rate

High turnover rate of minorities and female employees has become a serious issue in the
United States. Even though many ethnic races form this country, male Anglo-Saxons dominate
the majority of the workforce. It is not uncommon for minority and female employees to
leave their company after only working for a few years. Why has this behavior become a
trend? In order to stop this trend, companies must ask themselves several questions. For
example, what are the issues causing the high turnover rate? What legal and ethical issues
are the companies facing? After these questions have been asked and processed, solutions
must be implemented to change the flow of the trend.

While implementing solutions to the high turnover rate, companies must know and understand
the law. The law is created and enforced by the government to prevent any discrimination
or biases between the company and employees. It also prevents the strong, corporations,
from taking advantage of the weak, employees.

Keeping a high turnover rate, companies will continue to lose money until they decide to
deal with the issue. Through some adjustments and implementations of the programs to lower
turnover rates, the company can see a significant change in their costs and what they
might actually save.

Companies must understand the potential hazard that high turnover rate may cause company.
By analyzing banks, one can understand what and where the problem lies.

Statement of Problem
Employee turnover costs are very costly to a company. Turnover not only affects the bottom
line but also affects the company's morale. We are analyzing the problems within our
company that are causing our employees to become unsatisfied with their job. Then we are
going to find solutions. And then do the cost estimates of the turnover costs and the
turnover savings after our solutions are implemented.

Without understand the negative impacts of turnover, a company may be placing itself in a
position that will ultimately lead to their demise. We are going to solve our problems and
set our company on the path to success, a success that is not only reflected in our bottom
line but also our employees' morale.


Currently, the Bank of Tomenak employees 20,000 people, which only 35% are female or
minority. The average biannual turnover rate for our females and minority employees is
65%. The average turnover cost for one employee is estimated to be 18% of their annual
salary. Our annual salary is $36,000. Each year an average of 2,275 females and minorities
are leaving our company. Our yearly turnover cost is an estimated $14,529,356.00

Originally our turnover cost was estimated to be $35.2 million per year. This was derived
from a calculation created by Cornell University and Saratoga Institute. However, the
calculations were not precise. Therefore, we looked for alternative calculations.

The Chally Group , based out of Dayton, Ohio, adapted a study by the University of
Wisconsin Extension- Center for Community Economic Development to produce a turnover
calculator. In this cost calculator, each subtotal cost was itemized. Therefore, we could
identify the costs that were not relevant to our company. We then were able to subtract
the irrelevant costs from our final total turnover cost.

The total cost of turnover is broken down into three main sections: Separation Costs,
Replacement Costs, and Training Costs.. The Separation Costs consist of:

• Cost of exit interviewer,
• Cost of Exit Interview Employee Time
• Admin. Cost Related to Termination, and
• Increase in Unemployment Tax.

The Replacement Costs consist of:
• Pre-employment Administration Costs
• Costs of Attracting Applicants
• Cost of Interview Process
• Assessment Cost
• Background Check Cost
• Staff Cost to Meet & Confer, and
• Post-employment Administration Costs.

The Training Costs consist of
• Cost of Informational Literature and Manuals
• Duration of Formal Training
• Costs of Trainer's Time, and
• Learning Curve of New Employee.
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