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The Cost of High Turnover is More Than You Think

Turnover is expensive. Losing employees, and then having to replace them, sometimes over and over again, adds up fast. And turnover is something all employers face. The median employee tenure at any given job is 4.6 years (or 3.2 years for workers aged 25 to 34).

Consider the healthcare industry, for whom turnover is particularly brutal. The median turnover for physicians in a hospital group is 8%, and the cost of turnover per provider can exceed a million dollars when considering direct recruitment costs, the cost of training and onboarding, and lost revenue. That means medical groups with just a few hundred physicians may find themselves facing annual seven-figure turnover costs.

Those figures are admittedly extreme. In general, turnover is said to cost an average of 33% of the employee’s salary. However, that figure may be misleading by leaving out a number of significant indirect costs.

For example, nearly half (47%) of companies say that it takes 10 or more months for salespeople to become fully productive, according to CSO Insights. At Week 20, the new worker is only just hitting 75% productivity on average. That means every time you have to replace a worker, not only do you lose revenue and productivity during the interim period, you also lose partial revenue and productivity for up to a year after you replace them.

These factors can be particularly impactful and disruptive for certain positions. For instance, some organizations have sales cycles that can last 12 to 18 months (or more) for particularly high-cost or long-term products or services. Frequent churn can both interrupt delicate sales relationships and depress sales potential because the sales organization is never really performing at optimum levels.

Then there’s the impact on others at the organization. Someone has to do the work, and frequent turnover can mean the staff members left behind end up shouldering more than their own workload. That can lead to burnout. It can also compromise customer service; no one performs at their best when they’re overworked, which can lead to churn in customers.

What can you do?

Obviously any form of employee engagement program will help. The longer you can keep employees, the more you save in all these turnover costs. Plus, engagement programs have been shown to increase profits by $2,400 per employee per year.

One immediate avenue to investigate: your management staff.

According to Gallup, the main issue in workplace discontent isn’t money but the boss! Managers account for at least 70% of the variance in employee engagement. In fact, Gallup has also found that 75% of employees have left a job at some point in order to escape a bad manager. Businesses should evaluate these areas and consider how they affect their organization’s turnover.


CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with employee engagement, benefits, payroll, and HR administration. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.