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How Much Does Employee Turnover Really Cost?

For Immediate Release: October 4, 2011
Contact: Jenice R. Robinson, 202.906.8007, or Jillian Holzer, 202.906.8017 at CLASP, or Alan Barber, 202.293.5380 x115, at CEPR

Washington, D.C.- Employee turnover costs businesses millions each year, but many employers don’t realize exactly how much it’s costing their company. To help human resource managers and business owners understand turnover’s toll, CLASP, the Center for Law and Social Policy, and the Center for Economic and Policy Research (CEPR) today are releasing a turnover calculator, a dynamic new tool that allows employers to calculate how much turnover costs in just 10 questions.

When an employee leaves or is laid off and a company looks for a replacement, expenses such as advertising, recruiting, background checks, benefits administration and staffing can add up to major costs. The turnover calculator allows businesses to vary wages, weekly hours, and recruiting and hiring costs to calculate the cost of turnover for different categories of workers. It considers typical hourly or annual pay as well how employers fill vacancies and how long it takes new employees to become proficient in the position.

With the economy still sluggish, many businesses struggle to maintain or increase their bottom lines. The turnover calculator provides employers the opportunity to measure their turnover costs so they can develop and plan for policies that save money and help their business.

CLASP and CEPR developed this tool as part of its broader advocacy work to ensure work life balance for employees. Forty-four million workers, or 42 percent, lack paid sick days. Research shows that employee turnover is less when workplaces have supportive policies such as paid sick days and paid family leave. Workers without such benefits often struggle with decisions to stay home to recover from illness or nurse a sick family member versus losing their job.

“Policies that expand job quality lead to improved employee loyalty and morale and can make a significant difference for workers and for businesses,” said Andrea Lindemann, a policy analyst at CLASP. “Employees have the security and benefit of being able to take time off when needed without facing retaliation and employers have a more loyal workforce, therefore reducing employee turnover.”

“One of the greatest investments companies make is in employees,” said Eileen Applebaum, senior economist at CEPR. “But when an employee leaves, that investment is diminished. There are very good workplace policies like paid sick leave that help prevent losing that investment. Once employers understand the cost of turnover, we hope they’ll see the need for policies that support their employees as a means of reducing their costs.”

View the turnover calculator online now.

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