Cost of Employee Turnover
Estimated total cost of replacing one employee, including recruitment, onboarding, and lost productivity
What is Cost of Employee Turnover?
Cost of employee turnover is the estimated total cost of replacing an employee who leaves. It includes hiring, onboarding and the lost productivity while a new person gets up to speed.
Putting a figure on turnover helps leaders see that retention is worth investing in.
How this KPI is measured
- Function
- Human Resources
- Sub-function
- Talent Retention
- Industry
- All Industries
- Type
- Lagging
- Impact
- Financial control
- Unit
- $
- Measurement frequency
- Annual
- Formula
- Average cost per hire + onboarding cost + estimated productivity loss during ramp (typically 50–200% of annual salary)
How to calculate it
Add the average cost per hire, the onboarding cost, and the estimated productivity loss during the ramp-up period.
For example, with a cost per hire of 4,000, onboarding of 2,000 and productivity loss equivalent to 50% of a 40,000 salary over the ramp (20,000), the cost of turnover is 26,000 per leaver.
Productivity loss is an estimate that depends on the role, and it can be large for senior or specialised positions. Be transparent about assumptions.
Where it is used
Making the case for retention
Show the financial value.
Prioritising roles
Focus on costly turnover.
Budgeting
Understand the true cost.
How to improve it
Tips and common mistakes
- The figure is an estimate. Show your assumptions.
- Senior and specialist roles cost far more to replace.
- Use it to justify action, not to overstate.
More Human Resources kpi library
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