Case Scenario:
A financial services company with 100 employees in their Information Technology (IT) department had a high turnover rate within the IT group. A survey of IT employees revealed that the reason most of them left was dissatisfaction with the level of training.
- The average turnover rate for this department was 24 percent per year.
- The cost to recruit and train one new IT employee was $56,625.
To address the turnover problem, the company developed a skills training program.
- The skills training program averaged 80 hours per year, per employee for the 100 employees.
- The average IT employee wage was $40 per hour.
- Instructor, classroom, and other costs were $160,000.
In your written assignment, answer all of the following:
1. What is the total cost of training? The total cost of turnover?
2. If the turnover rate dropped 8 percent (from 24 percent to 16 percent), what would be the financial benefit of the training program?
3. What is the ROI of the skills training program with an 8% decrease in turnover?
4. How much would the turnover rate have to be reduced (from 24 percent) for the training program to show a benefit?