Many years ago, I was asked to assist a team in replacing a key employee who had resigned. As I began to define the recruitment plan, I looked at data such as how long it would take to fill the role, the impact on the team, the cost of recruiting and training someone new. As I reviewed the numbers, I realized something: This wasn’t just about one person leaving; it was about the total impact to the business and its employees. And spoiler alert: it was a lot.
That assignment shifted how I think about turnover. We often see it as a normal part of business. People come, people go. HR posts a job, finds candidates, and fills the role. But turnover isn’t just a people problem—it’s a financial problem.
Depending on the role, replacing an employee can cost anywhere from 50% to 200% of their annual salary. That’s not just about posting jobs and onboarding. It’s about lost productivity, missed deadlines, declining team morale, loss of institutional knowledge, and, frankly, lost time. Time spent hiring, training, and managing the impact from the turnover.
Here’s the thing: some businesses are actually encouraging this cost without even realizing it.
If there’s one thing most businesses love to talk about, it’s cost-cutting. We’re watching layoffs sweep across industries. DEI programs are being quietly shelved or publicly gutted. Budgets are tighter. Margins are under pressure. But in the rush to reduce headcount and trim initiatives that don’t show an immediate ROI, we’re ignoring the real price tag that turnover—voluntary or involuntary—presents.
I’ve come to think of turnover as a tax. You might not see it in your P&L, but it’s there. Every resignation is a little withdrawal from your cultural and financial bank account. But here’s the good news: just like any business expense, you can manage it.
I’ve seen it so many times: a smart, capable employee leaves, not because they’re unhappy, but because the only way to get a promotion or a raise is to go.
If you’re ready to tackle turnover, here are five ways to reduce it—or at least soften the financial punch:
1. Ask why people stay—not just why they leave.
Most companies are pretty good at exit interviews. Fewer are good at “stay” interviews. If you really want to know what keeps your best people engaged, ask them while they’re still there. These conversations are gold—low cost, high value, and often revealing in ways surveys can’t capture.
2. Make growing within the company easier than leaving it.
I’ve seen it so many times: a smart, capable employee leaves, not because they’re unhappy, but because the only way to get a promotion or a raise is to go. Internal mobility shouldn’t be a maze. Show your people a path forward in your organization, and they’re more likely to take it.
3. Don’t gut culture in the name of budget cuts.
I know “culture” can sound like a luxury in tough times. And I know some leaders are wondering if DEI efforts were a trend. Let me say this: People want to feel seen, valued, and like they belong. That’s not fluff—it’s a retention strategy. You don’t have to use a standard DEI playbook, but don’t walk away from the whole game.
4. Train your managers like they hold the keys to your retention budget—because they do.
Here’s an uncomfortable truth: bad managers are expensive. They create churn, kill morale, and often drive out your best people. The good news? Great managers are just as powerful in the other direction. Train them to lead with empathy and clarity, especially now when uncertainty is high.
5. Knowledge is power.
People leaving isn’t random. Use your data. Who’s resigning? When? From which teams or departments? What roles are hardest to keep filled? Don’t just track turnover—analyze it. That’s not just an HR exercise; it’s organizational intelligence.
I’ve stopped thinking about turnover as an inevitable cost of doing business. It’s a choice. Not always in the sense that you can control every departure—but in the sense that you can choose how you respond to the patterns, how you invest in your people, and how you manage the risk.
In a moment of economic uncertainty when money is on everyone’s mind, I encourage you to do the math on your talent strategy. Not just what you’re spending on headcount, but what you’re losing when people leave. It might be the most expensive line item you’re not tracking.
Source – https://tcbmag.com/losing-good-employees-is-more-costly-than-you-think/