Automation ROI: accounting for employee turnover costs

Start with the cost of the current process

Investment in automation includes more than equipment. Integration, devices, installation, and initial training are all part of the comparison. On the operation side, gather hours dedicated to the activity, total cost per hour, maintenance and losses that can be reduced.

Use a representative period. An exceptional month can distort the picture of the operation. Distinguishing volume produced, margin and hours worked helps not to treat increased revenue as net savings.

Count replacements, not just people

To estimate turnover, count departures followed by replacements during a year. A team of five people may have more than five replacements in a period if the same vacancy is filled several times. The average cost per event can include recruitment, selection, admission, dismissal and training.

Use costs determined by the company with HR and accounting. The calculator does not calculate severance pay or apply labor percentages. If replacement does not occur or roles change, adjust the assumption to reflect the situation being assessed.

Compare two operational scenarios

Enter current and estimated annual replacements after automation. The difference, multiplied by the cost per replacement and divided by 12, is the monthly portion of turnover savings. If the forecast after the change is higher, this portion will be negative.

Don't assume that installing a robot automatically reduces shutdowns. Ergonomics, work organization, remuneration, training and other factors can influence retention and replacement. The expectation needs to be supported by data from the operation itself.

Avoid counting the same benefit twice

If hiring, training, or termination are already prorated into the total hourly cost, do not add them back into the turnover. The same goes for productivity losses already included in other gains.

Hours freed up for another task represent available capacity. To convert them into financial benefit, identify the realizable effect: for example, cost that no longer exists or additional margin that can be obtained. Don't add both at the same time without justifying the difference.

Use sensitivity to discuss the decision

THE ROI and payback calculator shows the informed scenario and variations of −20% and +20% in positive benefits, maintaining costs and investment. These ranges are test hypotheses, not statistical ranges or promises.

Simple Payback does not consider flow discounts, financing or ramp-up. If these variables are relevant, complement the financial assessment. Take the summary to engineering along with load, cycle and layout.

O midigraf case presents a report of changes in the operation with small boxes. Your results help to formulate questions, but they do not replace your factory's premises.