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Big Problem (but no big deal): cost of turnover

Big Problem (…but no Big Deal)

A while ago I came across a survey of CEOs which found that:

  • attracting and retaining staff is the “single biggest issue” CEOs face
  • most companies were concerned enough to discuss it at Board Level (…so it’s a big problem)
  • but fewer than ⅓ of them measured the cost of the personnel turnover (…but not a big deal)
  • nor did they measure their “attraction and retention” strategies

We can calculate the damage in dollars of personnel turnover through this standard formula:

Total Cost of personnel turnover = ¾ to 1½ × average employee wage

Let’s do the math.

# of employees annual personnel turnover in % average wage of employees at rate range

.75 – 1.5

annual cost of personnel turnoverie, the damage in dollars
15 20%


$113k – $225k
50 20%

$375k – $750k
100 20%

$750k – $1.5m
400 20%

$3m – $6m

Here’s the point: it’s far better, cheaper, wiser and economical to invest in acquiring and retaining the right talent than to pay for your recruitment errors as they walk out the door.

Or to put it another way:  talk is cheap, turnover isn’t.


About Dr. Duff Watkins [www.execsearch.com.au]

international executive search consultant / author-- dispensing career advice about how the job market really works


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Dr. Duff Watkins

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