The average turnover rate was 23% percent per year. The cost to recruit and trai
ID: 2646606 • Letter: T
Question
The average turnover rate was 23% percent per year. The cost to recruit and train one new employee was $56,625. To address the turnover problem, the company developed a skills training program that averaged 80 hours per year per employee. The average employee wage was $35 per hour. Instructor, classroom and other costs were $170,000.
a. What is the total cost of training? The total cost of turnover?
b. If the turnover rate dropped 8% (from 23% to 15%), what was the financial benefit of the training program
c. What was the ROI of the training program?
d. How much would the turnover rate have to be reduced (from 23%) for the training program to show a benefit?
Explanation / Answer
(a) Total Cost of trainning = (35 x 80) + 170,000 = $ 172,800
Hence, total cost of trainning is $ 172,800.
Total Cost of turnover = Cost of recruit and train + Skill trainning progaramme
Total Cost of Turnover = $ 56,625 + 172,800 = $ 229,425
Hence, total cost of turnover per employee is $ 229,425.
(b) Average turnover rate = 23%
Total cost of annual trainning per employee = $ 172,800
Total Cost of Turnover = 172,800 / 23% = $ 751,304
The Financial benifit for trainning programme = $ 751,304 x 8 % = $ 60,104
Hence, the financial benifit for trainning programme is $ 60,104.
(c) Computation of ROI of the training program.We have,
ROI of trainning program = 60,104 / 172,800 * 100= 34.78 %
Hence, The ROI of the training program is 34.78%.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.