How Much is Turnover Costing Your Company?


If you’ve been accepting resignation letters faster than you can post jobs, it’s time to make some serious adjustments to your company — and fast. Hiring new employees isn’t just a temporary hassle, it’s a very expensive endeavor that can take your entire organization down.

The costs of turnover vary greatly, but generally amount to a hefty percentage of the person’s annual salary, including

  • Approximately 30-50 percent for entry-level employees
  • More than 150 percent for mid-level employees
  • Roughly 400 percent for high-level or highly specialized employees

4 Indirect Costs of Turnover

It’s easy to measure the direct costs of turnover, such as paying unemployment compensation, offering referral bonuses and conducting background checks on new employees, but other expenses aren’t quite as obvious. Four major indirect costs caused by turnover that can’t be calculated on a balance sheet include:

Lost Knowledge

When an employee leaves your company, everything they learned during their tenure goes with them. Even if they have a chance to train their successor, there’s only so much knowledge that can be transferred. The new hire will have to learn how to navigate the job on their own and that can take a significant amount of time.

Decreased Productivity

In most cases, you probably won’t find a replacement before the employee’s last day, so the job will remain vacant for awhile. Your existing team will be forced to pitch in and take time away from their own jobs to complete pertinent tasks, but they won’t be able to accomplish everything on their own.

Low Employee Morale

It’s very unsettling to work for a company with a high rate of turnover. Existing employees tend to be much less productive when they’re constantly watching colleagues pack up their desks. Many will quickly wonder if they should be doing the same thing.

Damage to Your Reputation

High employee turnover is a poor reflection of what it’s like to work for your company. If this becomes standard procedure, top talent will avoid your organization at all costs. It’s very hard to attract high-quality candidates when you’re plagued with the reputation of having unusually high turnover.

Searching for candidates who want to grow their career at your company? Contact Barrington Staffing. More than 75 percent of our regular staff has been with us for 10-15+ years, so we know a thing or two about hiring the right person for the job.

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