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The Hidden Costs of Turnover

Hard to measure business costs are often treated as if they don't exist. Consider employee turnover. Does your company underestimate its cost?

Of course, some turnover is unavoidable and even desirable. However, many valuable employees leave for completely preventable reasons. This unnecessary and undesirable turnover costs the company substantial, but usually unacknowledged dollars.

Review the partial list of turnover related expenses below. Give special attention to those listed under the "Hard to Measure or Predict" section (the hidden costs of turnover) and add additional costs that apply to your specific situation.


  • Background checks, drug testing and other screening
  • Recruiting fees or costs to advertise the open position
  • Staff time will be spent reviewing applications and conducting interviews
  • Lunches or dinners that are part of the process
  • The cost of formally training the replacement
  • Setup of the new employees computer, voice mail, ID badge and network access

Hard to Measure or Predict

  • The value of intellectual property that may pass to a competitor.
  • Staff time diverted to training a replacement.
  • Underperformance of a new employee versus one with experience.
  • Damage to relationships with customers or clients with whom the former employee has worked for years.
  • Prior to leaving, the negative impact of an unhappy employee on their co-workers.
  • Resentment from employees who bear an extra burden during the transition - usually without being asked or given extra compensation.
  • Damage to your company's reputation from derogatory comments about you or your business made to the former employee's friends, family or even to the web's worldwide audience. (Of course, this same cost can be incurred from disgruntled employees who are still on the job.)
  • Damage to management's credibility and effectiveness because remaining team members resent that a valuable colleague was needlessly lost.
  • Other employees follow the departing employee to their new job, multiplying all of the aforementioned costs.
Related:  How to Ensure that Your Employees Feel Valued
Infographic: Tips for Reducing Employee Turnover
Infographic: Tips for Reducing Employee Turnover


Since inexpensive retention measures can dramatically mitigate the problem, what steps is your company taking to limit unwanted departures and retain experienced staff? Should you be doing more?