Employee turnover is a problem that many companies face, but do not know how to handle. The higher a turnover rate a company has, the more likely it is that the remaining employees will resent their jobs. When you can cut down on employee turnover, you can save money as a company and keep remaining employees happy. The bottom line here is that no company can afford employee turnover, no matter how successful it is.

Separation Costs

One of the biggest costs of employee turnover is that of separation costs. Separation costs come when the employee decides to leave the company for any variety of reasons. Items that fall into this segment include severance packages, extension of benefits and even the time spent during exit interviews by your staff members.

Recruiting Costs

Once the separation costs are paid, your company now has to spend more money in an effort to fill that position once again. This is the segment that focuses on recruiting. Your company will either partner with a recruiting firm, which costs money, or take care of their own recruiting using current human resource personnel.

Some costs associated with recruiting include advertising for the open job, using an employment firm to find a new employee, incentives paid to employees who refer candidates, processing of resumes submitted, interviewing candidates, conducting pre-employment screenings and even offering signing bonuses to the candidates chosen for the open jobs. Should the employee not live locally, the company might have to pay relocation expenses.

Training Costs

Another direct cost of employee turnover is that of training. Each time you hire someone new, you need to train them for the position so the job is done correctly. This can be done using online courses, shadowing other employees, using an in-office mentor, or paying to send the employee to a training course outside of the office. The company will also need to pay for training materials, which can include books, DVDs, pamphlets, company handbooks and instruction manuals.

Lost Productivity

An indirect cost from employee turnover is that of lost productivity. When employees leave your company at a high rate, the productivity of your remaining employees will drop at a quick rate. The remaining employees will have work piled on them that belonged to the employees who left, which means they might not have enough time in the day to finish the work. If the work is left unassigned, it will not be completed until a new employee is hired.


When employees leave a company, no matter the position they held in the organization, it is noticed by other employees, management and even the customers of the company. If this employee worked exceptionally well with clients or customers and the new employee has not lived up to the previous employee, then the client might take their business elsewhere. This is another indirect cost of employee turnover.

Your company needs to evaluate its employee turnover rate immediately and begin to implement changes to your hiring practices in order to lower the number. If you want a strong partner to ensure you reduce company turnover, or to help hire employees who stay for the long run, contact the employment experts at TempStaff today.

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