Accounting Now Employer Newsletter
The High Cost of Turnover
Treating people as your greatest asset is essential to a firm’s success. Turnover is a serious business and financial factor that all firms should monitor. An economic turnaround could lead to another talent war so the time is right to focus on staff retention.Even using conservative assumptions, a firm could easily spend well over $30K to replace a team member with an average salary of $60K. In the last year some firms have been through staff reductions that kept turnover in the 20% to 25% range. While there may have been a short-term savings in payroll, you can see that the long-term costs of turnover directly affect profits. Read Complete Story
| Turnover rate | 25% | 20% | 15% | 10% |
| Turnover per person | $32,500 | $32,500 | $32,500 | $32,500 |
| Total firm turnover cost per year | $812,500 | $650,000 | $487,500 | $325,000 |
| Turnover cost as a % of annual profit** | 81.25% | 65% | 48.75% | 32.50% |
**Turnover costs are based on a one-year operating assumption.