The Extremely High Cost of Employee Turnover

Turnover is very expensive to your bottom line. Estimates run between one- and fifteen-times annual salary depending on the role.

Imagine the cost of hiring the wrong CEO for a Fortune 500 company; it could be tens of millions of dollars. At a minimum, even a year’s salary of an entry level employee can be expensive, especially to a small-to-medium business.

Many leaders underestimate the negative financial impact to their bottom line because turnover doesn’t appear as a separate line item in your financial reports. That makes it easy to overlook.

There are three main reasons that turnover has such a negative financial impact:

1.    You’ve got to take time out of production to find another employee, and finding a good one can take a while. Even after making a new hire, there is a high probability the employee will leave within the first 60 days, and you’ll have to start over.

2.    You’ve got to take the time out of production to train the new employee to the point that they can be effective enough for you to even break even on what you’re paying them. This can be weeks or months.

3.    You must suffer with the financial lost opportunity cost of what the right employee could have contributed in the role.

If you’re looking to scale up your business, attracting and retaining talent is the name of the game. It’s important to learn how to hire the right people and then treat them in such a way that they want to stick around.

It’s unlikely you’ll ever have zero turnover, but the more you can minimize its high cost the more money will move to your bottom line.

Don’t be a stranger. (770) 993-1129. tdockery@TheResolveFirm.com