Do you know how expensive employee turnover is?

Employee turnover is a fact of life. It is however, a costly fact of life. An article by Suzanne Lucas in Inc. has estimated that it can cost up to 150% of salary to replace an employee that has left. 
This estimate includes recruiting and training a new hire as well as loss of productivity while the position was vacant.

There are a myriad of reasons why employees decide to leave a company, see our article These include a promotion or a higher paying more challenging position, but the most destructive, and by far the most preventable reason employees move on is a lack of engagement. Not all turnover is bad, but there is a balance to be struck between bringing new people with freshideas and ways of thinking into the company and keeping your current employees engaged and happy.

Hidden costs include:

Lowered productivity: The person who has left was filling a specific role within the company with a complementary set of tasks assigned. Even if you spread the workload out among the remaining staff the chances are that the most important stuff will get done but ancillary tasks will fall by the wayside.

Overworked remaining staff: Farming out the workload can result in employees being stretched thin as they contend with their own workload and pick up the slack left by their departing colleague. The more people have to do, the more the quality of their work suffers and this will have an impact on company performance down the line.

Lost knowledge:  While there are many people who can do the job that the former employee did, they won’t have the specific knowledge that he or she possessed. This knowledge is built up over a period of time and is industry, company and even team specific. This is lost when an employee abandons ship.

Training costs higher: Beyond the obvious costs associated with a training course which the new employee may need to complete there are hidden costs associated with the informal training and onboarding of a new colleague. The most obvious of these hidden costs is time. Someone will have to show the new employee what to do and how to do it, possibly multiple times. Someone will have to check their work until they have proven themselves capable. This all takes the ‘trainer’ away from their day job.

Recruitment process costs higher: Leaving aside the obvious costs associated with this process, posting on job boards or using a recruitment agency or headhunter there are serious time costs involved in the recruitment process. Some businesses may have a dedicated HR/ recruitment team who deal with this on a daily basis, but in a smaller company the onus may fall on one person who will have to define the role profile and the type of person sought, go through CVs, perhaps conduct screening calls with potential candidates, schedule and organise interviews and then negotiate and close with the successful candidate.


Hiring the right people from the start is the best way to combat employee turnover. Design your recruitment process to ensure that not only do candidates have the right skills but that they fit well with the company culture, management style and with co-workers. Cultural and motivational fit involve innate characteristics that can be difficult to develop.

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