The Surprising Price Tag of Employee Turnover (You’re spending .5 to 5x the Employee’s Annual Wage!)


Employee turnover is costly. And, for most companies, this isn’t surprising. However, what is surprising is the actual price tag of turnover. Every time an employee walks out your door, you’re spending up to 5x the employee’s annual wage!

And, if that isn’t bad enough, there’s hidden costs that take a direct toll on your company’s bottom line AND growth.

Turnover Cost Multiplied…

Depending on your company’s size, you could be losing millions of dollars annually due to turnover. Here’s a snapshot of the big picture. For an average company, you’ll lose about 12 percent of pre-tax income, according to the Society for Human Resource Management. For a company with $25 million dollars in pre-tax income, this adds up to $3 million dollars!

Companies with a higher turnover rate, in the 75 percentile, lose about 40 percent of their pre-tax income. For a pre-tax income of $25 million dollars, that’s a $10 million dollar loss!

Wide Spread Effects

Employee turnover causes a ripple effect throughout your organization. This serious problem interferes with your ability to develop new products, disrupts client relationships and decreases employee morale.

Plus, as employees become overwhelmed, they get dissatisfied. The result? Even higher turnover. It’s an expensive cycle to break. Take a look at the widespread affects:

• Maxed out employees. 34 percent of employers say job vacancies have resulted in lower quality products and services, because employees are overwhelmed.

• Lower earnings. 23 percent of hirers say job vacancies resulted in revenue losses.

• Drops in employee morale. 33 percent of employers say vacancies created lower morale.

• Overwhelmed employees. 31 percent of employers expect to cross train workers to fill in gaps – leaving existing employees wearing many hats.

• Higher turnover. 17 percent of hirers say vacancies are causing even higher turnover rates.

Fortunately, some simple strategies will plug the leak and boost retention levels.

Plug the Leak

Put valuable dollars back in your pocket by simply putting the right employees, in the right positions. We know, it’s easier said then done. If you need help just call us.  Another powerful tool is to create an internal farming system which we’ve explored earlier in detail. This develops your brightest internal talent, and provides healthy competition to drive your organization forward.  Progress equals happiness.

Also, manage your turnover paths. Through surveys and exist interviews, you can identify why employees are leaving. Once you identify patterns, you can generate strategies to improve turnover.

You’ll also want to pay attention to which types of employees are leaving. Are they key players or employees from a specific department? Develop strategies to target these groups of employees. If you need assistance, CERS can help!

Stay tuned, for valuable information in the weeks ahead! We’ll address some of the most important issues that face your company. Are you signed up for our blog yet? Don’t miss out, subscribe, and we’ll deliver this information conveniently to your inbox. Simply subscribe to our RSS feed today!


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