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Actual Cost of Employee Turnover & Ways to Improve Retention

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Actual Cost of Employee Turnover & Ways to Improve Retention

Steve Burton

Morrison University

ACTUAL COST OF EMPLOYEE TURNOVER & WAYS TO IMPROVE RETENTION

Employee turnover is one of the largest problems for many organizations, yet it is one of the most unknown cost. Although employee turnover may not seem like a big deal, it is very expensive part of the business. A study done several years back showed that less than 50% of businesses had a plan to determine what turnover was actually costing them. A majority of businesses simply went on intuition alone to determine turnover cost (Blake, 2006). With a competitive mobile workforce it is crucial for businesses to figure out what turnover is actually costing them. It is also important for businesses to have a plan in place to improve retention. By doing this they can maximize their profits and retain the talent they have worked so diligently to recruit. In this paper I will discuss how much employee turnover really cost businesses in detail and are businesses really acknowledging this as an issue.

There have been several studies done to estimate the actual cost of losing an employee. In one study I found it showed that employee turnover cost are different based on the position held, for example the cost to replace an entry level worker is much different than a management position. However, when we look at the overall cost it is staggering how much it really is. In an article I found there were three categories in which it broke down the actual cost to replace an employee and I listed them below (Blake, 2006).

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1. Entry level employees cost 30-50% of their annual salary.

2. Middle level employees cost 150% of their annual salary.

3. High level executive or specialized employees cost 400% of their annual salary.

To better understand…...

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