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Woodbridge, NJ 07095

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Horizon 2 Bangsar South City,

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Room 2104, Peninsula International Building, 182-8 Haier Road, Qingdao, Shandong, 266000

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Room 18F/G/H, Shanghai Industrial Investment Building, No.18 Caoxi Road, Xuhui District, Shanghai, 200030

Tel: +86 21 64270570


26th Floor Bldg.2,No.88 Jitai 5th Road, Xiangnian Square, Tianfu Avenue, Hi-Tech Zone, Chengdu, Sichuan, 610041

Tel: +86 28 86703369

Wan Chai, Hong Kong

EA Licence no. 66051 & 64845

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Tel: +852 36223225

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Here’s Everything You Need To Know To Reduce The Risk Of Employee Turnover

January 28, 2019

When considering the cost of hiring, onboarding, training, ramp-up time, and the loss of engagement from others, employee turnover affects more people than you may think. Businesses have to manage error rates, general culture impacts, and the total cost of replacing the employee.

A departure from a critical employee can create cultural and logistical rifts that echo throughout the company. Not to mention the expense of employee turnover, and the conservative estimates place the total cost ranging from tens of thousands of dollars to 1.5-2.0x the employee’s annual salary. For a highly-skilled job, that rate may expand up to 200% of the cost of one year’s compensation for that role. ​​​

How to Calculate Your Cost of Turnover 
To gain a better understanding of the impact employee turnover has on your business, read on for additional information on breaking down expenses and addressing the issues directly.

Averaging Out The Costs
Your company’s cost of employee turnover is equal to the number of employee departures multiplied by the average cost of those departures.  And the number of departures is only equal to the number of employees multiplied by your annual turnover percentage


Annual Cost Of Turnover = Hiring Cost + Onboarding Cost + Cost of Vacancy x Number of Employees Annual Turnover Percentage

The average cost of departures can only be an estimate, however;  by combining the costs of hiring, onboarding, training, learning and development, and time with an unfilled role, we can get close to the figure.

Ways to Improve Employee Retention:     
There are three main factors that contribute toward employee turnover; company culture, employee salary, and long periods of time spent stagnating in the same job. By improving the three key areas your company can reduce the amount of money spent on employee turnover.

Company Culture Matters: Companies that have a better overall satisfaction rating are more likely to keep their employees as they progress through their career. In addition, employees who worked at companies with higher career opportunities are thus more likely to stay in-house for their next role, and better office culture and core values improve the numbers. ​

Improved Salary: Higher base pay has an important impact on whether employees are more likely to stay or leave. On average, a 10% higher base pay is associated with a 1.5% higher chance that a worker will stay at the company.  While it is important to provide upward career paths to workers, “job title promotions” alone without higher pay may not be an effective way of improving retention. Instead, maintaining competitive base pay appears to be an important factor in predicting lower employee turnover.

Recognize Career Paths: Employees who languish in a job too long are likely discouraged about career prospects in the company, making them more likely to look elsewhere. One simple way employers can help minimize this driver of workforce turnover is by creating clear and predictable career paths that escalate employees predictably through roles in the organization. By moving employees upward, you can help minimize the risk of this type of turnover.

Overall, take the time to understand the true financial impact of employee retention and analyze the numbers to understand where you can stand to improve. In all areas, you should look to make your employees feel they are wanted and provide them with enough reasons to continue passionately working for your company.

At Comrise we can help you and your company define and improve your career opportunities. Our staff members are highly skilled in finding exceptional talent to fill open positions and selecting the “right” professionals for your company. Moreover, we can help you create an operation that will attract and hold on to top career-oriented professionals in your industry to further contribute toward the success of your business.

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