The costs of employee turnover are astronomical. The Center of American Progress conducted a study that found the cost of replacing an employee can be anywhere from 20 to more than 200% of the former employee’s salary. That figure can vary depending on the level of the vacant position (mid-manager vs. C-Suite) and the duration of the vacancy. Direct costs of employee turnover include search costs such as online ads, search agencies, interviewing costs, and  training and onboarding costs just to name a few. Additionally, there are indirect costs associated with replacing your talented employees; they are listed below:


Lost productivity

With fewer employees, it is assumed fewer things are getting done.  Lost productivity begins as early as the announcement of the individual’s notice of resignation and extends past the replacements hire date. Information published from Bersin by Deloitte says that it can take up to 2 years for the new hire to reach the productivity levels of his/her predecessor.


Lost time

Lost or wasted time is directly related to lost productivity. Employees that are involved in the screening and hiring process lose valuable work time to these other activities. Peers and direct managers of the vacant position can spend several hours per week in interviews. The longer these positions remain open, the more time that is wasted and taken from work-related tasks.


Low engagement and morale

Employers try to make up for lost productivity and lost time by forcing additional projects on their remaining employees. However, overloading your employees can easily backfire.  Wearing them down with additional work can cause them to disengage and put forth even less effort to their original work. Disengaged and overworked individuals very well may be the next vacancies you are faced with filling. Overcompensating for lost time and productivity quickly becomes a dangerous and vicious cycle.


Lost contacts/skill

Last, but not least, when a valued employee walks out the door, his/her knowledge, network, and skills also walk out the door. It is possible to retrain a new hire to learn the working knowledge of the position but it is nearly impossible to regain the full knowledge bank of the former employee in regards to position nuances, company culture, etc.  To help mitigate the impact of this area: look into the possibility of cross-training your employees, ensure that processes and policies are clearly documented in a centralized location, and effective and efficient training programs are available.

There is no precise monetary value to place on these four areas, but the summation of direct and indirect costs of employee turnover should be enough to ensure that you take this reality very seriously. To best minimize these costs: conduct exit interviews, create a system of employee feedback and satisfaction, and most importantly be proactive!