Why Does Employee Turnover Cost So Much?

There are both direct and indirection employee turnover costs to consider. Direct employee offboarding and exit costs include payouts for severance pay, accrued sick time and vacation time, ongoing contributions to health insurance, and potentially higher taxes for unemployment.

Indirect exit costs include opportunity costs for the period of time when you have an unfilled role at your organization, reduced productivity as the departed employee's responsibilities may be fulfilled by someone lacking the same expertise, organizational time spent recruiting and interviewing for a new hire, institutional knowledge loss, and potentially lower overall employee morale.

When you factor in both the direct and indirect costs, the fully loaded employee turnover cost is much higher than what meets the eye.