Right after Thanksgiving, PFC accounting firm opened a new branch office in the town with 30 new employees. Based on their study on the turnover rate of their 500 employees from other branch offices, they have found that 50 employees left in a year, 100 left in the second year, 250 left in the third year and the rest stay over 5 years. Learning the turnover situation is important for the firm’s operational planning. Next 3 years are years 1, 2 and 3.
There is a turnover cost for each person who leaves, such as the costs of recruiting, new employ training, interview, etc. The study shows that on average, this cost is $8,000. However, the cost is expected to increase to $9,000 for year 2 and $10,000 after year 2. Simulate the turnover situation of these 30 new employees at the end of year 3; that is, which employees still stay and which have left. Also, calculate the resulting turnover cost for these 30 employees over next 3 years according to your simulation result.