Learn, Share, Grow – The Cost of Employee Turnover

learn share grow

Below is a lesson from on the cost of employee turnover, as well as our key learning.

The Blue Courage team is dedicated to continual learning and growth.  We have adopted a concept from Simon Sinek’s Start With Why team called “Learn, Share, Grow”.  We are constantly finding great articles, videos, and readings that have so much learning.  As we learn new and great things, this new knowledge should be shared for everyone to then grow from.

How much does employee turnover really cost?

by Jack Altman

People are companies’ most important assets. We’ve all known this for a long time, but 1) we pay it lip service more often than we try to do something about it, and 2) it’s true more now than ever.

The rise of technology and the information age has resulted in more companies that compete based primarily on their people. This isn’t only true for technology companies like Facebook and Google; as software continues to eat the world and the pace of business increases, nearly all companies will live and die by their continual ability to innovate.

Despite the fact that most organizations know that their long term advantage resides in their people, most companies don’t think critically about how to increase employee retention.

In this post, I’ll argue that the core reason people don’t think about employee retention seriously enough is because they don’t know how to measure the impact. I’ll then share some frameworks for how you might associate dollar values with regrettable turnover, and once I’ve (hopefully) convinced you that this matters, give you some actionable ideas for improving the state of affairs.

Continue reading here.

Key Learnings:

  • Despite the fact that most organizations know that their long term advantage resides in their people, most companies don’t think critically about how to increase employee retention.
  • Employee turnover is expensive, but most people have no framework for quantifying this cost, or they never even bother to try.
  • Maia Josebachvili, VP of of People at Greenhouse, produced a case study where she argued that retaining a sales person for three years instead of two, along with better onboarding and management practices, yields a difference of $1.3 million in net value to the company over a three year period.
  • Josh Bersin of Deloitte believes the cost of losing an employee can range from tens of thousands of dollars to 1.5–2.0x the employee’s annual salary.
  • Employees are appreciating assets that produce more and more value to the organization over time, which helps explain why losing them is so costly.
  • A paper from the Center for American Progress, citing 11 research papers published over a 15-year period, determined that the average economic cost to a company of turning over a highly skilled job is 213% of the cost of one year’s compensation for that role.
  • Your company’s cost of employee turnover is equal to the number of regrettable departures times the average cost of those departures.
  • While we can’t capture every single expense, or even some of the big intangible costs like impact on employee morale, we can get a good sense by analyzing four major buckets:
    • Cost of hiring
    • Cost of onboarding and training
    • Cost of learning and development
    • Cost of time with unfilled role
  • You can use this spreadsheet as a resource.

  • Multiple studies show that while under-compensation can definitely contribute to employee churn, over-compensation won’t make up for a bad workplace.
  • Spend your energy focused on the next level of Maslow’s hierarchy of employee happiness: opportunities for growth, the ability to have impact towards a purpose, and a caring environment that makes them feel valued.
    • Growth – Giving your employees authentic opportunities for growth is something you have to build into the fabric of your company.
    • Impact – Impact applies at two levels; the impact your company is having on the world, and the impact an individual is having on your company. Articulating a clear and purposeful company mission is important not just because it help people prioritize their work, but because it helps them keep going through hard times and know they’re part of something that matters.
    • Care – Feeling cared for and recognized addresses another basic human requirement; the need for human relationships and for others to acknowledge to us that we matter to them. An environment where people feel like their coworkers have their best interests in mind comes with all kinds of benefits.


Do you have a story that you would like to share? Contact us, we’d love to hear from you!

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