How Does Employee Turnover Cost You

A turnover cost is not something which you can evaluate on a piece of paper. That said, whenever an employee leaves a company, there are always some hidden costs which are incurred. Sure, there are costs like advertisement for the new job, but if you are not following that procedure and are basically going for the word of mouth and employee referrals to get a new employee, the costs remain largely hidden.

If you are still confused about how it really happens, read this article to clarify your concepts


  • 1

    The Productivity Effect

    Whenever a person leaves, the job which he or she was doing cannot be done exclusively. Sure, as a manager, you will ask other employees to fill up the void, but they would already by doing something and chances are that some things will always be compromised till another employee is hired.

  • 2

    More Load on the Remaining Staff

    When you put extra load on the employees with the same pay check, they might do that with good will for two to three day, or maybe even a week, but after that they will become overworked, frustrated and overworked and are more than likely to start looking for other job opportunities. The bottom line is that till the time you don’t hire a new employee, you are basically digging a big hole for yourself, which becomes deeper and deeper by the day. This cost cannot be put on the paper, but is huge.

  • 3

    Reduction in Knowledge Database

    A turnover not only sees the exit of an employee but also of a vast knowledge base, which he or she learnt over an extended duration. Sure, all the basic stuff can be done by somebody else, but what about the specialized skill which the departed person had. Consequently the productivity and flow of the work suffers.

  • 4

    Cost of Training

    There are many jobs which demand specialized training, and even when you hire a new employee, you will have to spend huge wands of money on the relevant training courses and seminars, just to get him or her oriented.

  • 5

    Cost of Interviewing

    If you are hiring someone from other city, you will have to pay the travel cost. Even if your hiring is inter-city, you will have to spend a lot of time in sorting out and evaluating a pile of resumes. A lot of time is also spent is on interviewing the shortlisted candidates and making the final choice. All this time equals to money.

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