There are, of course, no methods sufficiently comprehensive to apply in computing the cost of the labor turnover in all plants, because, of necessity, this expense, depending upon the cost of employing and training skilled workers, must i differ, not only in each industry, but to some • free in each factory as well Magnus W. Alexander, who has made a most thorough study of this question, estimated that the 12 metal working factories of which he made a survey lost $831,000 in a single year in the effort to maintain a normal force of workers. During this period 42,571 persons had been em ployed and 37,274 employees had quit the organizations for one reason or another, making a net increase in the working force of only 6,697.
While few reliable investigations have been made regarding the actual cost of changing help in industrial plants, it is generally agreed that the estimate of $40 per operative is ex tremely conservative. As Mr. Alexander says and Firing') : "While one manager estimated the cost of hiring and breaking in an employee at $30, the estimates of all others ranged from $50 to $200 per employee. The great difference in these estimates is no doubt due to the diversity of the industries repre sented by these managers. Most estimates ranged between $50 and $100.
In view of Mr. Alexander's estimate that it costs $73.50 to engage and break in a new semi skilled operative and $8.50 to make an un skilled laborer fit into this part of the organi zation, it would seem that the lower estimate of $40 might safely be adopted as a minimum cost of a new worker, yet, even at this figure, the labor turnover becomes an item of expense that is worthy of the most serious considera tion, the loss from this source undoubtedly be ing greater than that due to strikes.
For example, it is generally admitted that a labor turnover of 100 per cent should provide for every contingency, including all weaknesses in the labor situation and the inefficiency of the employment force. This estimate is based upon the assumption that about 1 per cent of the employees will die annually; that from 4 to 5 per cent will have to be replaced because of prolonged absence due to illness or other un avoidable causes; that about 5 per cent will be discharged for justifiable reasons; that about 8 per cent will leave with legitimate excuses, and that another 8 per cent will be released on account of natural fluctuation of production. It is also admitted, of course, that no employ ment department can be operated on a 100 per cent efficiency basis, but, assuming these esti mates of the percentage of unavoidable changes to be reasonably correct, the difference between them and the 100 per cent turnover should make ample provisions for all conditions that might arise, including human frailties and all normal changes in the labor situation.
As a matter of fact, however, a 100 per cent labor turnover is an exception and not the rule, for in plants where no special efforts have been made to stabilize the working force it is not uncommon to find the turnover ranging from 200 to even 700 per cent, and this under con ditions that are not regarded as abnormal. For example, the United States Bureau of Labor Statistics, in a study of the turnover of 12 com panies in the San Francisco Bay region, for year ending 1 June 1918, found it had been necessary to hire 32,489 persons to keep 14,083 jobs filled. This means an annual turnover percentage of 224 for the aggregate labor forces of these concerns. To compute the cost of this changing force, estimating the expense at the conservative figure of $40 per man, indicates how stupendous must be the economic waste that is traceable directly to this source, an amount running into the tens of thousands — if not hundreds of thousands for the average employer every year.
Computing Turnover Cost.—The difficul ties in computing the cost of labor turnover are many, as this item of expense is one that depends largely upon the character of the in dustry and individual plant conditions. Thus, in plants where highly skilled workers are re quired an operative is not easily replaced and the cost of finding a successor for such a work man is much greater than that of employing an unskilled or even a semi-skilled laborer. Other factors besides those of skill and ex perience also have a bearing upon this question, for the cost of breaking in new operatives must necessarily depend upon such considerations as the value of the tools or machinery with which they work, or the value of the materials which they must handle.
In spite of all these difficulties, however, there are certain basic principles that may be followed in making an analysis of the cost of employing workers. These include (1) the cost of hiring; (2) the cost of instruction; (3) the loss through wear and tear on tools and ma chinery used by unskilled hands; (4) the loss through excessive waste made by inexperienced hands; (5) the loss through reduced produc tion, including the excess plant equipment re quired to offset the smaller production made by inexperienced operatives.