The high cost of losing an employee.

Most employers today have implemented successful employee retention strategies to retain their workforces and reduce turnover.

Employers are aware that the cost of turnover can be as high as 1.5 to 2 times the amount of the departing employee’s salary, not to mention the hidden cost of training a new employee and regaining lost productivity.

The importance of reducing employee turnover.

High numbers of turnover per year lower the morale of the work team. When a worker sees a colleague leave, he questions the reasons for a while, which reduces his performance and productivity as he tries to find explanations.

In addition, a company with high turnover risks damaging its reputation and ability to attract talent.

But what is the real cost of turnover?

According to, the average cost of replacing an hourly employee is $1,500. For those in technical positions, it ranges from 100% to 150% of their salary. For C-level positions, the cost is even higher: up to 213% of their salary.

In terms of time, it can take one to two years for a new employee to adapt and reach the productivity of an existing employee. And having the position unstaffed could mean an increased workload for others and missed deadlines for tasks.

There are obvious costs, such as advertising the new position or using a recruiter, time spent interviewing, and time spent on training.

An affiliate of the Society for Human Resource Management estimated that replacing them costs six to nine months of an employee’s salary. For an employee earning $60,000 a year, that’s $45,000 to hire and train their replacement.

How to calculate employee turnover rates

The numbers differ for different industries, but there’s a simple formula you can use.

  1. Divide the monthly employees you lose by the average number.
  2. Multiply the answer by 100. A good target for your turnover rate should be around 10%. Some turnover is expected due to poor performance or reductions in force, but beyond 10%, start evaluating what else is going on that is causing your workers to leave.

A strong company culture can help you build retention strategies, and by sizing up the actual cost of employee turnover, the savings benefit the operation.


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