Part 4 The Surprising Cost of Employee Turnover


The Crushing Cost of Employee Turnover

You may know a boss who thinks If people don’t like the way I run things, there’s the door.

Here is the problem with that thinking.

The cost of losing an employee can easily reach 150% of the employee’s annual compensation figure. The cost will be significantly higher (200% to 250% of annual compensation) for managerial and sales positions.

To put this into perspective, let’s assume the average salary of employees in a given company is $50,000 per year. Taking the cost of turnover at 150% of salary, the cost of turnover is then $75,000 per employee who leaves the company. For the mid-sized company of 1,000 employees who has a 10% annual rate of turnover, the annual cost of turnover is $7.5 million!

Do you know any boss who would not want to add $7.5 million to their revenue? What about the company with 10,000 employees? The cost of turnover equals $75 million!

Low turnover and high engagement make a good business

Un engaged employees who quit and leave or who quit and stay produce poor or inconsistent results which impacts client satisfaction. This leads will lead you to a reputation of company that produces a sub-standard product and poor service.

Issues created by unsatisfied clients are damaging to the business in terms of what it costs to correct the issue.

Employee turnover correlates positively to client attrition. This means, when you lose employees, you lose clients.

As published in Forbes Magazine in an article entitled “It’s Cheaper to Keep Em’” if the business can retain all of its customers by just one additional month on average, they can achieve an additional 3 percent of annual growth. If they can retain their customer base for four additional months, they can create double-digit growth–without adding a single customer.

Other research has calculated that a 5% increase in customer loyalty equals a 25% increase in profits and engaged employees can be up to 50% more productive. (The Business Case for Coaching, John Lazar, sourcing The Human Capital Institute.)

Employee engagement and loyalty are directly connected to client loyatly and therefore increased sales and profits.

Our time at work takes up such huge part of our lives so we owe it to ourselves to tap into our spirits to find the essence of our power. We owe it to those who employ us as well as to those who report up to us to build a culture where there is spirit at work and people are alive from 9 to 5 because, for your company to thrive, the people must thrive.

Come visit next week to read about how your company culture is the hidden cause of success or failure

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Author:  Corry Robertson

Sought-after coaching culture expert, Corry Robertson has been helping leaders uplevel employee retention and performance for over 20 years.


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