What Does Employee Turnover Cost?

Employee turnover cost can be significant to any company, ultimately hitting squarely on a company’s bottom line.

Estimates for Employee Turnover can range anywhere from 10% of an employee’s annual salary to 150% or more, based on the scope and complexity of a role.

In this week’s blog we help you quantify what your employee turnover is truly costing you.  The factors that impact employee turnover cost can significantly vary from one position to another. Where certain expenses may not be applicable at all to the replacement of one position, they may be significant to the replacement of another.

Direct and Indirect Employee Turnover Cost1

(see the accompanying chart with an estimated employee turnover cost for Project Manager)

Direct Employee Wage Cost by Other Employees

Employee time and wage expense incurred by current or temporary employees involved in the exiting process or required to perform additional duties as a result of the separated employee.

Replacement Employee Acquisition Cost

Expenses related to the service fees required to assess,  interview and promote candidates.

Employee Placement Cost

Expenses related to any materials, supplies, equipment or uniforms that have to be provided to a new employee.

Lost Productivity Cost by Other Employees

Lost income from the full or partial days of productivity by any employees involved in the selection, interviewing, onboarding and training of a replacement employee.

Lost Productivity Cost by the Replacement Employee

Lost income from the number of lost full days while the position is open and the number of lost full or partial days from the replacement employee’s start date until they are fully productive (which could range from a few days to more than a year based on the complexity level of the position).

See next week’s blog on the key strategies and tactics your company can implement to significantly increase employee retention and reduce employee turnover expense.


Direct Employee Wage Expenses 

Exit interview


Admin. Time to Process Documents


Separation Pay


Temporary Help


Extra pay / Overtime pay to other employees


Replacement Employee Acquisition Cost

Advertising Fees (Job Board Postings, etc.)


Employment Agency / Recruiting Fees


Employee Referral Fees


Travel Reimbursement Expenses


Candidate Assessment Fees


Drug Testing and Background Check Fees


Relocation Expenses


Employee Placement Cost - New employee materials, supplies, equipment, uniforms

Other Employee Lost Productivity Cost 

Lost Income from the Full or Partial Days of productivity by any other employees required to temporarily perform some or all of the duties of the departed employee or who are involved in the selection, interviewing, onboarding and direct training of a replacement employee 3


Employee Lost Productivity Cost

Lost Net Income from the Number Lost Full Days while the position is open 1


Lost Net Income from Lost Full or Partial Days from the employee’s start date until they are fully productive  2


Total Expense / Lost Income from Employee Resignation

1 Number is based the Net Income lost from the lost revenue not able to be generated as a result of either lost project work or having project work  re-assigned to other Project Managers during transition,   resulting in the slow down or loss of new projects being able to be secured as a result.
2 Number is based the Net Income lost from the lost revenue not being generated as a result of the lower productivity of a new Project Managers during their onboarding and training process until they become fully capable and productive in their role.
3 Number is based the amount salary expense required of those employees involved in the candidate interviewing and selection process.
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