How Much Does Turnover Cost You?!

2x? 3x? Does that even sound right?

Mar 01, 2023

Estimated Reading time: 4 min

I am back!

Sorry, it took me a while to get back to this. I suck.

The truth is, I got sucked into a few projects: writing my mini-book on Charisma and creating my new Practical People Analytics Course that is now available to help you build your data-driven HR. 🙌

Let’s get re-acquainted!

My name is Konstantin, and I write the Strategic People Analytics Newsletter focused on helping HR professionals enter the People Analytics world.

My goal is to help 10,000 HR professionals leap into People Analytics, and I am so excited to have you as a subscriber!

Now, let’s get into why you are really here—the turnover cost!

Turnover sucks.

You act awkward around the departing employee. You have to figure out how to cover the position. You have to spend hours on LinkedIn looking for your next unicorn.

But that’s not all.

It costs you money. 🤑 A lot of it.

But wait… how much precisely?

Let’s see.

There are 5 sources of employee turnover cost:

Employee Attrition Event Cost
Productivity Loss
Cost to Hire
Onboarding Cost, and
Productivity Ramp Cost

Let’s break each one of them down.

1. Employee Attrition Event Cost

The unicorn decides to leave, and now you must figure out how much this will cost you.

Of all the costs, Attrition Event Cost falls at the bottom.

It boils down to what you must pay the employee as they go into the sunset. Usually, a few weeks of vacation as all other costs have already hit your budget.

Phew!

2. Productivity Loss

This will be the time between the unicorn's last day and a new unicorn at the stable.

So, say 45 days if you hurry up your efforts.

More if you snooze.

You will ask the team to wear many hats. You will pick up a few things yourself. You will juggle tasks and drop a few to the ground. Ouch!

On top of that, you will take time away from HR. After all, they would have to offboard your unicorn.

3. Cost to Hire

Not humongous, but significant.

The costs will include a few things your recruiters will do:

Intake meeting
Position posting
Reaching out to the candidate
Time on LinkedIn
Screening
Scheduling interviews
Having a war with the compensation team
Getting all approvals
Sending the offer
Negotiating

This is on top of all the things you have to do:

Screen
Interview
Figuring out skills versus bragging
Making decision
Checks and balances

This can be a quick process or a slow one. It all depends on how much pain you can tolerate without your unicorn.

4. Onboarding Cost

Okay, so you found your unicorn. Now what?

Well, more cost for you! Yay!

This includes any swag and basic setup you do for everyone. The hours to IT and HR resources organizing the experience and coordinating with background checks and laptop delivery.

But don’t forget the onboarding orientation and hours and hours of training you have to invest at the department level to ensure the employee has a great experience and can start delivering value quickly.

After all, you don’t want them to turn around and leave because you skimped on the orientation.

5. Productivity Ramp Cost

This is the most expensive cost.

You pay full-time + benefits for 50% of the value for the first few months. They are learning how you do things at the company, who to talk to, how to sell to customers, and how to code in your app.

Not an easy task. Even if they have all the skills in the world.

This is where you cringe and give an "Almost Meets Expectations" rating.