Employee turnover is one of the most underestimated financial drains in the workforce. While companies are quick to track expenses like payroll, materials, and benefits, the hidden (and very real) cost of losing and replacing employees often slips under the radar. Understanding the full picture of turnover costs isn’t just helpful, it is important for operational decisions and the longevity of your team.
In this blog, we’ll address:
- The Hard Numbers: What Turnover Really Costs
- The Non-Financial Cost of Employee Turnover
- What’s Driving These Costs?
- Common Questions About Turnover Costs
- What You Can Do to Reduce Employee Turnover
- Turnover is Inevitable, but High Costs Aren’t
The Hard Numbers: What Turnover Really Costs
Turnover is not just an HR inconvenience, it is expensive. Studies show that the cost of replacing an employee ranges from 50% to 200% of their annual salary, depending on the role. For example:
- Entry-level roles: 30-50% of salary
- Clerical/Admin positions: 50-80%
- Skilled hourly workers: 75-100%
- Technical/professional positions: 100-150%
- Supervisory roles: 100-150%
That means replacing an employee earning $60,000 annually could easily cost between $30,000 and $120,000, or more. Nationwide, turnover costs American businesses over $1 trillion per year, with an additional $1.8 trillion lost in productivity. For a business with just 100 employees, the turnover bill could exceed $2 million. Turnover doesn’t just hit your budget– it hits your team too.
The Non-Financial Cost of Employee Turnover
When a team member leaves, the emotional and cultural impact can ripple over the entire team. This can mean increased stress, fractured workflows, and a loss of trust or motivation.
According to a study from the American Psychological Association, more than half of employees (52%) say that the departure of a valued coworker negatively affects their own job performance. For close-knit teams, that can mean lower morale, strained relationships, and even more exits. This is especially true when the departure was unexpected or tied to burnout.
Even for managers, it can lead to emotional exhaustion. Research shows that managers experiencing high turnover are more likely to feel emotionally drained and less engaged themselves, which in turn can affect their ability to lead. So what do these costs come down to?
What’s Driving These Costs?
Turnover expenses fall into three main categories:
- Separation Costs: These include severance pay, benefits continuation, and time spent processing offboarding paperwork or exit interviews. There is also the less visible loss of morale and productivity from other team members when a colleague leaves.
- Recruitment Costs: These cover everything from job ads and recruiter fees to background checks and interview time. On top of that, internal teams spend hours reviewing resumes and holding interviews, which takes time away from business tasks.
- Training Costs: The time taken from internal members to help train new individuals and for the team to take extra time supporting new members takes away from other areas of business– which is not inherently a bad thing; you should take the time to train and use those resources. It just costs in other areas.
- Productivity Losses: This is the big one. When a seat is empty, work slows down. New hires take time to ramp up. Other employees may burn out covering the gap in the meantime.
The Link Between Engagement and Turnover
Employees who are disengaged are significantly more likely to leave, and they cost you more even while they stay. Engaged employees are more productive, more loyal, and better for business.
Whether you are scaling a team or rethinking your hiring process, a focus on engagement starts with hiring the right candidate.
Remote Work & Retention
Remote work has become a key driver of retention, but it is not without challenges. Companies offering flexible work often report higher satisfaction and lower attrition, but struggle with maintaining connection and culture. And on the other hand, some companies can’t operate remotely to begin with, which may further strain work retention.
A trusted staffing partner like Staffing Support Specialists can help you strike the right balance with flexible hiring models and culturally aligned placements.
Common Questions About Turnover Costs
How do I calculate turnover costs?
Start by adding up direct costs like recruitment expenses and subtracting the saved salary during the vacancy. Then estimate indirect costs like lost productivity, internal hours spent hiring, and training expenses.
A formula might look like this:
Do turnover costs vary by industry?
Absolutely. High-skill industries (like healthcare or IT) tend to face higher per-employee costs. In contrast, high-churn sectors (like retail or food service) might see lower individual costs but much higher volume.
What’s the difference between direct and indirect costs?
Direct (hard-dollar) costs are quantifiable and show up in your financials, like ads, recruiters, and training. Indirect (soft-dollar) costs include lost productivity, team disruption, emotional drain, and customer experience issues.
What You Can Do to Reduce Employee Turnover
The good news? Retention efforts cost far less than constant turnover. Forward-thinking companies are seeing results by investing in:
- Employee engagement and recognition programs
- Career development and training
- Competitive compensation packages
- Flexible work environments
- Review interview questions and processes
Companies that get ahead of turnover with strategic staffing and employee support see better performance and lower costs. Not sure if your team is secure for the long haul? Staffing Support Specialists can help you evaluate retention strategies that support your top talent.
Turnover is Inevitable, but High Costs Aren’t
Employee turnover is a fact of business. But unchecked turnover? That’s a choice. With average replacement costs ranging from 50% to 200% of an employee’s salary, the best investment a company can make is in keeping the right people and finding better fits when needed.
Ready to look for vetted talent? Need help with recruitment and retention? Partner with Staffing Support Specialists. Whether you’re hiring temporary, permanent, or contract staff, we’ll help you fill roles faster, smarter, and with long-term success in mind.
