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How Much is Turnover Costing Your Company?


If you’re like most managers, when great employees walk into your office and hand over their resignations, you experience a range of emotions. You’re sad to see them go, worried about what will become of the team and how their projects will be redistributed, and discouraged by the task of finding a replacement. None of these are wonderful feelings, to be sure. But in addition to the personal stress this announcement places on you, and on the rest of the team, you’ll need to think about the bottom-line cost of this event. Especially if it keeps happening over and over again.

How much you spending on annual turnover? Here are a few things to keep in mind as you develop this important calculation.

Start with the annual salary for the position.

If the cost of replacing an employee meets or exceeds the annual cost of the position, this can be a serious problem, especially if you’re re-staffing this role more than once per year. This number—the annual salary including bonuses and benefits—will be your start point as you determine the extent of your turnover issues.

Determine the cost of sourcing, selection, and hiring.

How much are you paying to publish your post, fund your recruiters, and transport your interviewees into the office? Don’t forget to add in the hourly rates that you’re paying your hiring mangers as they sift through resumes and prepare for and conduct interviews.

Add up the cost of training and acclimation.

How much training will your ideal new employee require before he makes the transition from newbie liability to seasoned asset? Keep in mind that you can hire underqualified candidates at a discount and provide training in-house, OR you can hire overqualified candidates who will take the reins immediately…but at a much higher annual rate.

Weigh the opportunity costs involved in training.

Training is expensive for a variety of reasons. First, you’ll be paying a full time employee to learn—not contribute (not yet, anyway). But you’ll also be paying those who take responsibility for his or her mentoring and acclimation, and these people will need to step away from their regular roles as they do this.

Additional costs

Factor in signing bonuses, referral bonuses, relocation costs, HR responsibilities, new equipment costs if applicable, and all the small odds and ends involved in letting go of one employee while searching for another. And as you do this, think hard about your retention strategy. Offer exit interviews and try to determine how you might prevent this problem in the future and hold onto your valuable human assets. Turn to the Little Rock staffing experts at CSS as you make this important assessment.

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