Employee Turnover Costs - Employee Exit Interviews: Insightlink Communications

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Employee turnover is inevitable and, while some employee turnover can be useful, losing good performers is not only a "brain drain" of your company's human capital, it also carries with it direct and indirect costs associated with both the separation and replacement of the very employees you would rather retain.

To a great degree, voluntary turnover is manageable. Investing in retention solutions that result in even a small reduction in your company's turnover rate can realize substantial reductions in turnover expenses over the long term.

Studies have estimated direct turnover costs per employee to be 25-30% of an individual employee's salary/benefits package, with hidden costs inflating that figure substantially. How much does turnover cost your company? Use Insightlink's simple calculator to see how much turnover impacts your bottom line.

Number of employees Average annual salary

Annual turnover rate
U.S. average = 15% % Benefits as % of salary

Turnover cash cost
U.S. average = 25%

How are average turnover costs calculated?

Studies by the University of Wisconsin Extension identified many direct costs associated with employee turnover. Examples are: Separation pay, termination and hiring administrative costs, exit interviews, employment advertising, employee pre-screening, interviewing, assessment testing, background checks, travel costs, moving expenses, signing bonuses, medical exams, formal and informal training time, employment literature and manuals, and a new employee's learning curve.

All these are figured into the average 25% of salary estimate while at the same time recognizing your indirect costs may, in fact, make this number higher.

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