The True Price Tag of Employee Turnover: Why High Turnover Will Cost You

Employee turnover is an inevitable reality that all organizations must contend with. But many fail to fully grasp the substantial financial toll turnover takes on a business. Between recruiting, onboarding, training, and lost productivity, turnover expenses can be astronomical. In fact, experts estimate that losing an employee costs a staggering 150% to 200% of that employee's salary.

With numbers like that, curbing turnover pays major dividends. After all, reducing turnover by just a few percentage points at a 50-person company can easily save $100,000 or more per year. So let's take a closer look at why turnover comes at such a steep price, and what you can do to retain top talent.

 

Calculating the Turnover Tax

Figuring out precisely what turnover costs your organization starts with identifying all the direct and indirect expenses involved when an employee departs. These include:

 

Direct Costs

Recruiting: Job board fees, recruiter pay, referral bonuses, etc. The average cost is $4,000 per hire.

Onboarding: HR processing, training materials/programs, and manager onboarding time. This costs up to $5,000 per new employee.  

Training: Formal training and ongoing mentoring until the employee reaches full productivity. The cost varies greatly by role complexity and seniority.

Lost Productivity: Volume of work not getting done while the position remains vacant. The cost here is hard to quantify, but the more critical the role, the more it'll cost you.

 

Indirect Costs

Cultural Impact: Lost expertise and institutional knowledge. Remaining employees work harder to cover open roles, raising stress and frustration.

Customer Experience: Service delays, errors, and miscommunications that erode client trust and loyalty. Again, this is hard to quantify but very real over time. 

When an employee gives notice, tally up these individual costs, then multiply the total by their salary to gauge the turnover tax in raw dollars. Do this for each departure to reveal turnover’s substantial cumulative expense. 

 

Strategies to Boost Retention

Now that you've seen the steep price tag of turnover, let’s discuss proven ways to curb attrition through stronger engagement and retention.

Show Appreciation Daily: Raise morale and cement loyalty by making people feel valued. Give public kudos, assignment flexibility, and small rewards to consistently reinforce each employee’s contributions. 

Develop Careers Proactively: Stimulate professional growth by uncovering latent talents and providing growth opportunities aligned to employee passions/skills. This demonstrates long-term investment in staff.

Pay Competitively: Benchmark pay against your talent market frequently. Lagging pay breeds resentment and prompts job searches. Exceed market rates for critical roles if you possibly can.

Listen and Act On Feedback: Solicit input through stay interviews, engagement surveys, and open office hours. Then demonstrate you hear concerns by improving pain points.

Balance Workloads Tactfully: Redistribute work volumes fairly to avoid burnout. Handle bumps in capacity with temporary staff rather than pushing excessive overtime.

Foster Community and Camaraderie: Build personal connections through small-group lunches, after-hours events, and even remote games and activities. It encourages people to stick together. 

 

Bring In Staffing Agency Reinforcements

To supplement the efforts above, partnering with a specialized staffing agency lends critical support in battling turnover's ongoing drain. The right agency becomes an invaluable talent ally by:

Handling Time-Consuming Hiring Legwork: Recruiters source, screen, interview, and onboard top temp or permanent candidates, saving you countless hours better spent running operations. 

Providing Specialized Skill Sets on Demand: Temporary staffing can swiftly inject missing skill sets rather than waiting months to recruit. This is ideal for short-term projects or backfilling roles quickly.

Managing Employee Overflow Gracefully: Scale up or down without painful layoffs during slower periods. Temp staff also fill talent gaps until permanent hires come aboard.

Supplying Objective Performance Insights: Third-party perspective on temp worker productivity helps assess cultural fit and capabilities before making job offers.

 

Don’t Underestimate What Turnover Truly Costs 

In today’s ultra-competitive talent landscape, overlooking turnover’s massive financial consequences can quickly spell disaster. Do the math for your own situation and take proactive steps – with a trusted staffing agency as an ally – to maximize workforce stability, productivity, and profitability over the long-haul.