What Are The Costs Of Employee Turnover?

A clock hangs on an office window.Imagine writing a check for thousands of dollars to a departing employee on their last day of work. Sounds crazy, right? That may sound ludicrous, but the costs of turnover often amounts to the equivalent of giving away thousands of dollars of a company’s hard earned money.

The American Management Association estimates it costs employers nearly 30 percent of an individual’s salary to replace them. Additional estimates state this figure can be up to two times the yearly salary for more advanced professions. So why are these costs so high for employers?

Recruitment and Selection

The first step employers take to find a replacement employee is to advertise the opening on a job board or the company’s website. The process of reviewing resumes, setting up interviews and conducting interviews is a time consuming process, especially for small businesses who may not have a designated HR department. Once interviews are complete, employers spend more time checking references, conducting background checks and making decisions about who to hire. Once that decision has been made it takes additional time to extend an offer to the right candidate.

Staff Productivity

Congratulations, you hired a new employee! While this is an exciting time for the new employee, it also creates a loss of productivity for other team members as the training process begins. Special projects and even small daily tasks may be slowed as current team members pause to help train a new employee.

Who are the members of the team affected by a new hire? If a business is large enough to have a human resources team, this is the first area to feel a loss in productivity. For small business owners the task of finding a new employee often falls on the shoulders of the owner or an office manager. Supervisors often need to modify project deadlines and productivity expectations when a new employee is brought on board. Other members of the team also feel a loss of productivity as the new hire learns the ropes of the company before becoming fully responsible for assigned duties.


One of the biggest hidden costs is the risk of burning out current employees who must fill in the gaps until a replacement is found. This may lead to more turnover and further financial costs if employees become frustrated enough to look for a new job. Another risk occurs after the interviews, screening and decision making are complete. Sometimes the replacement decides to accept a position with another company causing a company to start from scratch again.

How to Save

Many employers ask how staffing agencies can help save time and money throughout the replacement process. A staffing agency can provide assistance with ad creation and possess the knowledge of where to best post a job listing. Businesses who use staffing agencies enjoy the benefits of resume review, applicant screening and thorough background checks for all applicants.  This saves companies the time and energy to focus on the tasks that make the business successful, and allows the experts at a staffing agency to handle the search process on behalf of the company in need.

If you would like to find out more information on ways a staffing firm can help you find the next member of your team, contact our office at (608) 257-2411 to speak with an account manager.

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Stephanie Beirne Leuer is the Marketing Coordinator at Drake & Company Staffing Solutions, a staffing firm based in Madison, Wisconsin. Drake & Company specializes in temporary, temp-to-hire, and direct hire administrative, clerical and legal placements. Since 1978, Drake has reached beyond skills and qualifications to match candidate personalities with a company’s culture. You can connect with Stephanie by , and you can find Drake & Company on Facebook, Twitter, LinkedIn, Google+, Instagram and Pinterest.