Here’s Why Employee Turnover Is So Expensive

Here’s Why Employee Turnover Is So Expensive

While a small percentage of business owners view employment with them as a Darwinian culling process, most business owners hold that turnover is bad. That becomes particularly true when the people quitting are solid or star performers. The surge in turnover in 2021 only reinforces that basic management insight as employers scramble to fill those roles.

For many businesses, the primary concern is the total employee turnover cost. Just filling one empty position can prove costly. Filling multiple empty roles on a regular basis can become prohibitively expensive.

Not convinced that the cost of employee turnover is too high? Keep reading for a quick overview.

Direct Costs of Employee Turnover

There are several direct costs involved with replacing those departing employees. You must advertise the position, likely on online job boards and maybe through local publications, which always comes at a fee. Someone on staff must review the applications or resumes, which is time they don’t spend making you money.

Then, there are the employee or manager hours spent interviewing and maybe doing working interviews. Once you hire someone, you must still onboard them and train them, which both cost you money.

Indirect Costs of Employee Turnover

As bad as the direct costs of turnover may seem, they often pale in comparison to the indirect or hidden costs of employee turnover. The loss of any employee lowers productivity in some part of the business. If the employee was well-liked, you often see morale take a hit that reduces productivity even more.

You also lose any institutional or organizational knowledge the employee accumulated. The loss of that knowledge of how to get things done in your business often has a long-term impact on role-specific productivity.

Things can grow even worse if employees quit on bad terms. They can talk bad about the business, its practices, or its management and discourage potential future employees from even applying. That can make the recruitment process longer and more expensive.

For a look at how these costs affect a specific industry, check out this read on dental employees turnover.

Average Cost of Employee Turnover

You’ll find all kinds of employee turnover costs statistics out there. Some research claims it can cost upwards of a full year’s salary to replace an employee when you factor in all the costs. The reality is a bit more complex.

For high-skill and high-specialization roles that come with higher salaries, the cost can exceed the role’s annual salary. For low-skill and low-specialization roles, the costs usually prove much lower. Although volume can offset any savings.

Employee Turnover Cost and You

If you haven’t given much thought to employee turnover cost, it’s time you sit down and do the math. The direct and indirect costs of turnover can become a financial anchor for your business. In many cases, it’s often more cost-effective to give employees raises or institute education opportunities that make them want to stay with your business.

Looking for more insights into business finance or employee retention? Check out the posts over in our Business section.

Marisa Lascala

Marisa Lascala is a admin of She is a blogger, writer, managing director, and SEO executive. She loves to express her ideas and thoughts through her writings. She loves to get engaged with the readers who are seeking informative content on various niches over the internet.