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Employee Turnover Rates, Stats, and Costs


At some point many employees leave to join a different company, to start their own business venture or simply to move on to something else in their lives. All businesses will have to deal with such situations eventually. It is important to understand what factors leads to a worker leaving, and what the real cost is to the business.

On the Job Stress Leads to Loss of Employees

Stress can be a big contributing factor to loss of employees. Work related stress can come from a number of sources such as:

  • Heavy workload
  • Long hours
  • Lack of opportunity for growth and advancement
  • Unrealistic job expectations

Other Reasons Employee Leave

The pressures of the job aren’t the only reason why workers leave their jobs. Any kind of dissatisfaction with their current situation, or the prospect of finding something better, can lead to employees leaving their position. Some of the main reasons a worker might decide to leave their current job include:

  • Career advancement or promotion opportunity
  • Looking to improve pay and benefits
  • Don’t feel fit for the job
  • Unhappy with job security
  • Unhappy with management or work environment
  • Lack of flexibility and hectic scheduling

The Cost of Employee Turnover

Reducing the reasons for employees to leave a business is important for many reasons. The skills and talents of current employees are keeping the business going and add value to the company. Lack of employee retention will drastically increase business costs. Employee turnover will both directly and indirectly impact the company’s bottom line.

An entry level employee leaving will cost between 30-50% of their annual salary. For a mid-level employee, turnover costs increase to 150% of their annual salary. Failure to retain high level employees will cost up to a staggering 400% of their annual salary.

Direct Costs:

  • Severance pay
  • Recruitment process
  • Temporary replacement workers
  • Advertising for the vacant position
  • Screening, interview & pre-employment tests
  • Training the new employee

Indirect Costs:

  • Manager’s time spent interviewing candidates
  • Time spent advising from Human resources expert
  • Management’s time to recruit and train new workers
  • The Lost knowledge, experience, skills and contacts
  • Lost sales, if employee takes customers with them
  • Lost productivity

Clearly, employee retention should be the top priority of all business managers or owners. Many employees may not feel valued at their current job, which will eventually prompt them to seek employment elsewhere. Keeping staff moral high and motivated will go a long way to encouraging workers to continue working in the company.

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