Employee turnover can cost far more than just the salary of the departing employee. For HR directors, CFOs, and operations leaders, understanding the potential financial impact is essential for making strategic decisions about retention and recruitment.
Breaking Down the Cost
The total cost of losing an employee can be divided into four main areas:
Exit Costs: Administrative tasks, severance, and exit interviews.
Recruitment Costs: Sourcing and attracting the right talent takes time and resources. This includes advertising, screening, interviewing, and the expertise needed to ensure the candidate is the right fit for the role and the organisation. Working with a strategic recruitment partner can streamline this process, reduce time to hire, and improve long-term retention.
Onboarding and Training Costs: Induction programmes, training materials, and manager time to bring the new hire up to speed.
Lost Productivity Costs: The time the role is vacant and the period it takes for the new hire to reach full productivity, often 6 to 12 months for specialised roles.
A Simple Calculation Framework
To illustrate the total cost:
Total Cost = Exit Costs + Recruitment Costs + Onboarding/Training Costs + Lost Productivity Costs
Benchmarks in the UK suggest that the total cost of turnover can range from 70% to 200% of an employee’s annual salary depending on role and seniority. For example, losing an employee earning £30,000 could cost between £21,000 and £60,000. For a specialised manager, the cost can easily exceed £100,000.
Why This Matters
Understanding the potential cost of turnover allows organisations to make informed decisions about retention strategies, employee development, and strategic recruitment. Thinking about these factors supports stronger teams, higher engagement, and better business outcomes.
Recruitment agencies and talent hubs play an important role in helping organisations attract the right candidates who fit both role and culture. Connecting businesses with professionals who stay, grow, and succeed helps reduce turnover and drive long-term success.
Data and Context
The figures and ranges mentioned in this article are based on publicly available UK market research from sources such as Oxford Economics, CIPD, and the Recruitment & Employment Confederation. They are intended to provide general insight into the potential financial impact of turnover and to support strategic thinking around talent retention and recruitment. This information is for guidance only and should not be considered a definitive calculation for any specific organisation.
Take Action
Reduce the hidden costs of turnover by connecting with the right talent today. At Keen People, our Talent Hub helps organisations find professionals who fit both the role and the culture, ensuring long-term success. Get in touch to see how we can help your business attract, retain, and grow top talent.