The Hidden Expenses of Employee Turnover Cost


Despite conventional wisdom, employee turnover cost might be costing your business more than more robust employee retention efforts.

Retraining Costs

You’ve probably heard this one before—and that’s because it’s true. When you have higher than average, or even average, turnover you have to spend that initial investment over and over again.

The first part of this cost is the most obvious. Each time you lose an employee, you have to restart with a new person. This includes onboarding time, training, expected productivity loss as they sync up, and the other costs that make up a new hire. But, there’s another layer to this.

You also must spend in order to find that new employee and the more turnover you experience, the harder it gets.

Snowballing Turnover

Another cost associated with poor retention is the damage it does when it begins to snowball. If you have a high employee turnover, cost can go through the roof due to the disorganized environment that it builds. Turnover can often have a snowballing effect where workers seeing the high rate of turnover begin looking for other opportunities themselves.

This creates a workplace where employees have the expectation that new hires won’t stick around long, which weakens teamwork.


High turnover means that your workers never get the time they need to form a unified team. Teamwork isn’t something that can be onboarded in a week-long training program, it’s something that grows organically out of people working together. This takes time to foster and that time is robbed by high turnover which in turn robs your bottom line.

So how do you manage a better employee turnover rate?

Building Better Retention Efforts

The first step is to recognize that there is no such thing as zero turnover. Even the best work environment will still have people move, change careers, or just be a poor fit for the line of work. But, this doesn’t mean that you shouldn’t strive to retain your hires.

The best way to retain employees is to find ways to balance their needs with your bottom line. If you’re struggling with high turnover, try conducting exit interviews to find out why employees are leaving. Be honest and upfront about your capabilities as a business and their needs as employees.

This may involve some higher startup expenses on the business end, things like better benefits packages or improvements to the workplace are common reasons for high turnover, but you will recoup these costs over time by lowering your employee turnover cost.

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