The Cost of Staff Turnover

Indications are that employees are more likely to stay when there is a predictable work environment and vice versa (Zuber, 2001). In organisations where there is a high level of inefficiency there is also a high level of staff turnover (Alexander et al.,1994). therefore, in situations where organisations are not stable employees tend to quit and look for stable organisations because with stable organisations they are able to predict their career advancement

Staff turnover is now getting much need recognition as a high cost in badly managed organisations. In the past staff turnover was ignored and the cost of replacing an employee was not seen as a high cost. Now more and more HR managers see that a high level of staff turnover can have a direct effect on an organisation’s bottom line. Employee turnover is one of the largest costs in many different types of organisations yet it is one of the most undocumented costs and is unusually not included in any budgets. Companies usually record and budget for overheads like wages, materials, rent, insurance etc but until now very few looked at the cost of employees leaving the company. The costs incurred can vary greatly from the obvious to the unseen hidden costs.


As a result of the loss of a staff member production for example can be reduced. In the first instance the employee’s usual workload is not being carried out at all or in the second instance it is being added on to other staff member’s workloads thus reducing the quality and possibly costing more through overtime rates. This can therefore lead to time delays in production which could mean customers choose to go somewhere else when their product is not ready when they expected it.


Mangers now need to concentrate on replacing the lost staff member. This takes them away from their daily routine of dealing with production, customers, accounts, Human Resources etc. They will need to spend time organising applicants for interviews etc


When a knowledgeable or high level employee leaves they take with them all the knowledge of the business that others left within the organisation may not know. Important customer’s requests may not be met and they leave as a result.

By Admin.