The cost of employee turnover extends far beyond just recruitment expenses. For many organizations, these hidden costs remain unaddressed, yet they profoundly impact productivity, morale, and profitability. Understanding and mitigating these costs is vital to improving retention rates.
To help businesses reduce turnover by enhancing employee engagement, streamlining processes, and fostering a sense of belonging, tools like Amirra – an AI Employee Experience Assistant – were created
In this blog we will discuss the importance of turnover on a business’ bottom line, the motivations that drive employee turnover, and strategies and tools to help avoid it.
What Is Employee Turnover?
Employee turnover refers to the number of employees who leave an organization within a given period, whether voluntarily or involuntarily. While some turnover is inevitable, high turnover rates can signal underlying issues in your organization.
Turnover is often categorized as voluntary (resignations) or involuntary (layoffs or dismissals). It can also be avoidable, such as when an employee quits due to a lack of growth opportunities, or unavoidable, such as relocation. Identifying these distinctions helps organizations tailor their strategies to reduce employee turnover effectively.
How to Calculate Employee Turnover
Here’s a simple example to understand employee turnover:
Imagine you’re reviewing your company’s turnover for the past year. Over that time, 20 employees left your organization. If your workforce averaged 200 employees during the year, your turnover rate would be 10%.
To calculate this, divide the number of employees who left by the average number of employees, then multiply by 100 to get a percentage. This gives you a clear picture of how many employees you’re losing relative to the size of your team. Regularly calculating this can help you identify patterns and take steps to improve retention.
20% of employee turnover occurs within the first 45 days of employment
Why People Leave an Organization
Turnover affects more than just processes and costs—it takes an emotional toll on employees who stay. Losing colleagues can lead to feelings of isolation and uncertainty, especially for those who were closely connected to the departing employees.
Here’s some reasons why people may be deciding to part ways from your organization:
Onboarding
Impact on Retention: 20% of employee turnover occurs within the first 45 days of employment, often due to inadequate onboarding. Apollo Technical LLC
Employee Preferences: 43% of employees prefer digital onboarding processes over traditional ones. Thirst L&D Platform
Loneliness and Disconnection
Prevalence: Globally, 72% of employees report feeling lonely monthly, with 55% experiencing loneliness weekly. Soocial
Impact on Performance: Workplace loneliness leads to lower job performance, decreased job satisfaction, and increased turnover. HR Dive
Demotivation
Global Engagement Levels: Only 15% of employees worldwide feel engaged in their workplace, indicating a motivational crisis in the global workforce.TeamStage
Development and Opportunities
Employee Satisfaction: Nearly a quarter (23%) of American workers are not satisfied with their opportunities for growth and development at their workplace. American Psychological Association
Retention: Employees with access to career development programs are 15% more engaged, and 76% are likely to stay longer at companies offering continuous training. Peoplebox
Flexibility
Employee Demand: 80% of employees consider flexible work arrangements a deciding factor when evaluating job offers and staying with a company. Jobstik
Impact on Retention: 76% of employees would stay longer at companies offering flexible work options. Jobstik
Quantifying the Hidden Costs of Turnover
The costs of employee turnover fall into three primary categories: direct, indirect, and long-term.
Here's an estimated breakdown of turnover cost of an employee earning $50,000 per year, in a mid-sized company in the USA.
Direct Costs:
Recruitment
Job Ads: $500–$2,000 per hire (average: $1,250)
In-House Recruiters: $2,000 per hire
External Agencies (optional): 15–30% of salary ($7,500–$15,000 for $50K)
Background Checks: $30–$200 (average: $115)
Skill Assessments: $50–$100 (average: $75)
Average Cost Per Hire: $4,700 for mid-sized companies (aligns closely with these estimates)
Onboarding and Training
Onboarding: $1,500–$5,000 (average: $3,250)
Training: $739 per employee
Indirect Costs:
Productivity Loss
Time to Full Productivity: New hires require ~6.2 months, producing only 25% of a fully productive employee's output during this period. This equates to ~$23,125 in lost productivity over 6 months for a $50K role.
Team Efficiency Impact: Overburdened teams may face delays and quality issues, estimated at ~$2,500 per hire.
Morale Impact
Increased Absenteeism: 9% of payroll ($4,500 for $50K salary).
Additional Turnover Costs: The loss of cohesion and morale often leads to further attrition, compounding costs.
Long-Term Costs:
Customer Dissatisfaction: Varies but can significantly affect revenue, particularly in client-facing roles.
Employer Brand Damage: Harder to quantify but impacts hiring competitiveness and retention.
Estimated Total Turnover Cost
Direct Costs: Recruitment ($4,700) + Onboarding/Training ($3,989) = ~$8,689
Indirect Costs: Productivity loss ($23,125) + Morale/Absenteeism ($4,500) = ~$27,625
Grand Total: ~$36,314 (ranging from $30,000 to $50,000 depending on role complexity and organizational impact).
Overall, depending on their role and level within the organization, replacing an employee can cost between 50% to 200% of their annual salary. (MindGoal)
Strategies to Reduce Employee Turnover with Amirra
Tech companies often find themselves in a tough spot, with employees leaving for better pay, exciting career growth, or simply a new challenge. It’s no secret that high turnover doesn’t just impact productivity—it disrupts team dynamics, weakens morale, and can create a ripple effect that’s hard to contain. When employees see their colleagues heading for the exit, it’s easy for doubts to creep in. Is this company stable? Is there a future here for me? Could, or should I be earning more?
To counter this, organizations need to go beyond quick fixes and focus on meaningful, targeted employee experience solutions. By fostering growth opportunities, creating supportive environments, and listening to employee feedback, companies can strengthen commitment and build a workforce that stays for the long haul.
Amirra provides complete employee experience software that onboards, connects, develops and retains talent, including pulse surveys and analytics that identify trends and provide actionable insights.
Here’s more details on how to improve your retention with Amirra:
1. Build a Better Onboarding Process - Because first impressions matter.
Streamline, automate and humanize the full digital process. Reduce admin tasks and enhance communication of role expectations and company culture.
Facilitate early opportunities for social connection within the company.
Training programs based on individual needs.
2. Prioritize Employee Development
Amirra enables organizations to offer professional growth opportunities based on personal goals.
Access to training programs or certifications.
Internal mobility options for lateral or upward movement.
Mentorship connections to foster long-term growth.
3. Foster a Feedback-Driven Culture
Employees who feel heard are more likely to stay engaged. Leaders who foster trust, provide regular feedback, and prioritize transparent communication help create a culture where employees feel secure and valued. Amirra ensures this by:
Offering automated, real-time feedback tools that let employees know their voices truly matter.
Providing helpful suggestions to remind HR generalists and team leaders to send employee surveys, encourage personal assessments, or schedule one-on-one meetings.
Supporting “stay interviews” to uncover why employees remain and what could influence them to leave.
Using predictive analytics to identify early warning signs of disengagement or potential turnover risks.
Amirra empowers organizations to build a connected and engaged workforce.
4. Promote Flexibility and Wellness
Understanding the individual needs to support your employee's wellness is essential to a happy workforce. For example, a one shoe fits all aren't always the way while Millennials and Gen Z prioritize purpose and flexibility Gen X, and Baby Boomers may focus more on stability and traditional career paths. Amirra can help with these strategies through engagement data and surveys.
Implement hybrid work models or flexible schedules based on employee feedback.
Provide wellness programs, fitness challenges, benefits all via one resource center.
Encourage regular breaks to prevent burnout.
The ROI of Employee Engagement with Amirra
Investing in employee engagement delivers measurable benefits. Amirra’s tools make these outcomes achievable:
Increased Productivity: Engaged employees are 17% more productive.
Lower Turnover Rates: High engagement leads to a 59% reduction in turnover.
Improved Customer Satisfaction: Happy employees create positive customer experiences, driving revenue growth.
Conclusion
Employee turnover isn't just a financial challenge—it's a symptom of deeper issues that ripple through team dynamics, productivity, and company culture. Addressing these hidden costs starts with a proactive approach to employee experience. By investing in tools like Amirra, companies can go beyond plugging holes and create a thriving workplace where employees feel connected, valued, and motivated to grow.
In today’s competitive landscape, the choice is clear: prioritize people, and the results will follow.
For help with your employee onboarding, community, and retention contact Amirra – the all-in-one AI Employee Experience Assistant.
Contact our team to learn more.
