The ROI of Human Capital: Measuring the Economic Value of Employee Performance, Second Edition

202 THE ROI OF HUMAN CAPITAL

well done, they yield a wealth of information that can be

used to avoid further losses.

The best way to become motivated to do that is to calcu-

late the cost of turnover or human capital depletion. The

loss of a competent exempt-level person typically costs the

equivalent of at least one year’s pay and benefits for that

position. Note that these calculations do not include the ef-

fects on customers, which are potentially additional costs.

The point is that at today’s compensation level, if you lose

ten professionals, it will cost you about $1 million, plus un-

known outside losses. Ask yourself how much you have to

sell to produce a pretax profit of $1 million. The bottom line

on depletion rate and cost is that unwanted turnover ...