True Costs of Turnover…What Are They?

I Quit

Everyone knows that employee turnover carries with it accompanying costs–time, money, inconvenience, lost experience, and more. The Society for Human Resource Management says the cost of turnover is between 50% – 200% of an employee’s salary. Some scales push the upper range to over 400% of salary if it involves a positions that requires special skills.

What are the direct costs—those that a dollar value can be attached to them? These include:

  • Exit costs
  • Vacation and sick time payout
  • Overtime costs for payment to cover unfilled positions
  • Lost opportunity costs due to unfilled positions
  • Marketing costs to advertise open positions
  • Due diligence for a new employee—drug screen, background check, etc.
  • Orientation costs.

Indirect costs may be more difficult to quantify than direct costs but just as important, just  a bit “squishier” (if there is such a term). Typically, these costs center around the time it takes to exit one person and bring on a replacement. These include:

  • Exit interview time
  • Screening time weeding through applicants
  • Interview time for HE and Department leaders
  • Reduction in time managers are actually managing
  • Coordinating due diligence activities
  • Orientation and training time
  • Potential loss of morale of current employees its effect on job performance.

Do you know how to reduce turnover and improve retention? Hire the best culture- and value-fit candidates for each open position then, Managers can focus on employee engagement and retention.

If you want to learn how to improve retention by hiring better culture and value matches, contact us today at We’ll be glad to help!