Calculating the cost of turnover

May 23, 2006

If any hoteliers are reading this, listen up because this one’s for you. We all know that turnover is a huge problem for the hospitality industry. And it becomes a huge problem for meeting planners when their CSM leaves just before their event, or the sales person disappears and no one seems to be able to remember just what was promised (I know, get it in the contract, but things happen sometimes). From talking with hoteliers, it seems like people just sort of accept that high turnover is the cost of doing business. But do we really know just how high a cost it can be?

I just ran across this report (pdf) from Cornell Center for Hospitality Research professors Timothy Hinkin and Bruce Tracey, and it’s an eye-opener. They developed a Web-based tool to measure the actual costs of front desk personnel turnover, and found that it comes to a whopping 30 percent of salary, which averages close to $5,900. In addition, said Hinkin, “Our participants said that co-workers lost 20 percent of their productivity for up to 16 days when a colleague left the front desk.” And it gets more costly as you move up the hotel food chain.

The researchers are looking to add more numbers to their database, and so have made their turnover cost calculator available for any hotelier to use for free. I’d urge you to participate, both to learn just how much turnover is draining from your budget for various positions, and to help build a knowledge base for the industry. You can access the tool here.

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