The Cost of Employee Turnover

cost of employee turnover

The Cost of Employee Turnover

There is a lot of speculation on how expensive it is to replace a productive worker. Studies have found that on average, it takes 125% of an employees’ annual salary to replace them with someone else. As a matter of fact, the more specialized a position is, the higher the cost of employee turnover.

To understand how deeply turnover affects the welfare and sustainability of an organization, it is important to analyze the following:

  • Recruitment – Finding, interviewing, and onboarding a new employee is long and tedious process. In fact, hiring expenses happen to be the largest contributor to turnover costs.
  • Employee Morale – When one individual leaves, he or she plants the seed of doubt in the minds of at least a dozen others. These workers start wondering about growth opportunities in their current position and may even look around for more lucrative offers.
  • Loss of Skill, Knowledge & Productivity – A quitting employee takes with him a deep understanding of the business culture and a unique set of skills developed to work with this culture! Any new entrant has to acquire them from scratch and unless he or she does so, personal productivity is low which in turn affects the entire team.


Organizations must employ a number of different tactics to increase engagement and thus the chances of retention. Effective options include conducting stay interviews, crafting fair and competitive compensation plans, properly conveying the net value of employment and improving overall company culture.


HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. To learn more about our Stay Interview Software, STAYview, click the button below!

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