The Cost of Employee Turnover

There are an extremely low number of companies that do not have to contend with employee turnover. In some cases, turnover can be a good thing; however, if your turnover is high, it is a cost you should seriously try to avoid.

There are costs to the business regardless of the position that an exiting employee held. Of course; the higher the level of skill or responsibility the person had, the higher the cost to the company if the employee leaves.

How do you factor in the costs?  Here are some simple things to keep in mind that will hopefully help to illustrate why you want to keep your people. Hopefully, you don’t only want to keep them – but you want them to be happy and functional as well.


  • Cost of vacancy in terms of lost production or sales
  • Cost of overtime
  • Cost of temporary help (if required)
  • Cost of time to advertise and recruit
  • Cost of pre-employment administration time
  • Cost of testing materials (development or purchase)
  • Cost of time to review resumes/applications
  • Cost of time for reviewing interview questions & strategy (x however many people are involved)
  • Cost of lost time for those involved in interviewing (x however many people)
  • Costs of training (you now have your new person who is not yet contributing and you have lost production from the person training)
  • Costs of materials wasted during training phase
  • Cost of literature (if applicable – employee handbooks for example)

This is not an exhaustive list – just a sample of what to think about. There are also potential costs in decreased performance by employees that remain – again – depending on the position the exiting person held.

Especially during difficult economic times when it’s very tempting to consider cut-backs in staffing levels; consider just a few of these items before you make that decision. If there is no way around the decision to cut back on staff, then at least consider who you let go – consider the cost.


About hrscoops

This entry was posted in Employee Turnover, Retention, Workforce Planning and tagged , , , , , . Bookmark the permalink.

1 Response to The Cost of Employee Turnover

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s