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The Cost of High Turnover

So your organization has low levels of employee engagement and high levels of turnover. Some HR managers are of the opinion that simply encouraging the "quit and stay" group to actually quit is the easiest and cheapest solution. They may also think that replacement of these employees costs them relatively little. You may be surprised, however, to learn that it costs much more than you think.

  Turnover costs for # of employees
Average annual salary 50 100 150
$35,000 $75,000 $150,000 $225,000
$50,000 $108,000 $216,000 $324,000


Indeed, if an organization has an annual turnover rate typical of the U.S. average (15%) and offers benefits (medical and otherwise) valued at as little as 15% of an employee's salary (most companies' benefits may of even greater value), the approximate annual losses to turnover for that organization are in the tens of thousands annually. Of course, the greater the number of employees and the higher the salaries of those departing employees, the more costly the turnover is to an organization.

If these results seem shockingly high, consider what they include. The direct costs associated with employee turnover include:

  • Termination and hiring administrative costs
  • Employment advertising
  • Employee pre-screening
  • Interviewing
  • Assessment testing
  • Background checks
  • Formal and informal training time
  • A new employee's learning curve
Taking all these costs into consideration means that it generally costs at least 25% of a departing employee's annual salary to replace that employee. Not to mention how exactly you'll go about finding these new "fully engaged" replacements in the real world!

There are also indirect costs like lost institutional memory, the impact on morale, and risk diminished employee engagement among others likely to follow suit are not easily measured, but their toll on an organization is palpable and make employee retention a high priority for pro-active HR departments. The bottom line is: Keep them, and keep them engaged.

In the long run, improving both employee satisfaction and employee engagement can not only reduce your turnover costs but can significantly increase your company's profitability . Investing in employee engagement is a win-win on both sides of the equation.

Luckily for organizations willing to examine themselves and take actions accordingly, to a great degree, voluntary turnover is preventable. Investing in retention solutions that result in even a small reduction in an organization's turnover rate can realize substantial reductions in turnover expenses over the long term. Only by conducting regular employee engagement surveys to measure the pulse and climate of the organization and by augmenting those surveys with a systematic method of conducting effective exit interviews can HR managers understand the key motivators of loyalty and commitment among their employees and implement strategies to decrease voluntary turnover.

So if you are ready to see what's happening, hear about concrete actions designed to impact change and set to move forward on a meaningful path to improving your organization, call to talk to a member of our research team today at 866-802-8095 x705...or email information@insightlink.com to set up a conference call or demo to learn more.


Where do you fall within our Loyalty Matrix?

Committed Loyalist
Change Seeker
Dissatisfied Compromiser
Satisfied Opportunist

Take our short demo survey and find out now. An Insightlink 4Cs Survey can let you see this valuable data on employee engagement within your organization.

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Some of our satisfied clients


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Get a no-obligation quote today and find out how improving employee satisfaction can also improve your bottom line.

Did you know?

Our repeat clients who have used our 4Cs Action Planning Workbook average a 7% increase in overall satisfaction on follow-up employee surveys.

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Employee surveys are a low cost investment in the success and profitability of your company. Research shows that companies with higher levels of employee satisfaction financially outperform their peers.





DID YOU KNOW?

Employees at smaller companies tend to be more satisfied with their jobs than employees at larger companies.


The potential savings in reduced turnover costs can easily repay the cost of an employee satisfaction study many times over.


Health services, business services, social services, engineering and management, are expected to account for a higher-than-average share of the projected increase in total employment.



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