How much does an employee's resignation cost?
82% of companies don't measure what they pay when an employee leaves. Yet the cost of employee turnover is very significant.
Breakdown of the employee turnover cost
The expenses below are an industry estimate, adjusted to your company's parameters. Each item rests on specific assumptions, described here. The hourly rate comes from the average salary divided by 2,080 hours, and the weekly salary from the annual salary divided by 52. Each item is then multiplied by your number of departures per year.
What the moment someone leaves costs you
Resignation and management
A departure isn't handled in two emails. You have to announce it to the managers, talk to the team, discuss it among supervisors and reorganize the work while the gap is filled. These conversations are normal, but they take up people's time.
See the assumptions
9 h per departure: 30 min × 2 to announce it to the manager, 20 min × 12 to announce it to the team, 30 min × 2 of discussion among supervisors, and 90 min × 2 of reorganizing. These hours are valued at the average hourly rate.
Knowledge transfer
When a person leaves, their know-how leaves with them: ongoing files, contacts, ways of working. Documenting and passing all of that on takes several days of work. It's one of the heaviest costs of a departure, and often underestimated.
See the assumptions
4 to 10 days per departure depending on the sector: 4 days for retail, 7 days for industry, 10 days for services. Each day counts as 7 hours, valued at the average hourly rate.
Exit interview
Understanding why the person is leaving is worthwhile, but it takes time: preparing the meeting, running it, then discussing it internally to draw lessons from it.
See the assumptions
3 h per departure: 1 h × 2 for preparation and the meeting, plus 1 h of internal discussion. Valued at the average hourly rate.
Administrative processing of the departure
Removing access, finalizing payroll, recovering equipment, closing files: the end-of-employment paperwork can't be avoided.
See the assumptions
3 h per departure, valued at the average hourly rate.
Overtime
While the position is vacant, the work doesn't disappear: it falls on the team. If you pay overtime, those hours add up week after week.
See the assumptions
Calculated only if your company pays overtime: 50% of the weekly salary per week of vacancy. Since overtime is paid at 150 to 200%, this assumption stays conservative.
What finding the right person costs you
Job posting
Writing the offer, publishing it in the right place and making it visible costs time and money. And if you go through an agency, the bill climbs fast.
See the assumptions
4 h at the average salary, plus a $900 package per departure that covers about 3 posting platforms. For reference, posting a job costs $400 to $700 per platform, on sites like Workopolis, LinkedIn, Jobboom and Monster. For agency hires, we add 18% of the annual salary, applied to the share of your hires that comes from agencies.
Reviewing applications
Sorting applications, reading résumés and shortlisting takes focus. The more people a job attracts, the longer the sorting takes.
See the assumptions
4 h per departure, valued at the average hourly rate.
Interviews and selection
Meeting candidates, sometimes with two interviewers, comparing, choosing, making the offer and documenting it: it's one of the biggest costs on the hiring side.
See the assumptions
9 h per departure: 1 h × 2 people × 4 candidates for the interviews, 30 min for the offer and 30 min of documentation. Valued at the average hourly rate.
Reference checks
Calling former employers and verifying the candidate's background is a short step, but essential to hiring well.
See the assumptions
2 h per departure, valued at the average hourly rate.
What the time before full speed costs you
Administrative processing of the arrival
Setting the person up in the systems, creating their access, preparing their workstation: the arrival has its share of paperwork too.
See the assumptions
3 h per departure, valued at the average hourly rate.
Training
Training a new person takes up a colleague or a manager, often part-time for weeks. Two people are involved: the one learning and the one showing.
See the assumptions
A new hire requires 31.5 hours of training on average. In detail, these hours vary by sector and apply to 2 people: Retail 24 h, Industry 27 h, Services 33 h, that is 48 to 66 h per departure. According to the Association for Talent Development, the onboarding training effort is in this order of magnitude. Valued at the average hourly rate.
Loss of productivity
This is the heaviest cost. A new person isn't at full speed right away: they learn, they hesitate, they double-check. This ramp-up is paid in lost productivity, week after week, until full autonomy.
See the assumptions
25% to 75% of the weekly salary is lost until full autonomy, according to William G. Bliss's curve: during weeks 1 to 4, the person is 25% productive (so 75% loss); during weeks 5 to 12, 50%; from week 13 on, 75% (so 25% loss). The cumulative loss is multiplied by the weekly salary.
Worth keeping in mind, even if they aren't calculated here
The following items add to the real cost of turnover, but they vary too much from one company to another to be estimated reliably. We keep them out of the calculation while inviting you to bear them in mind.
13Opportunity cost
The work, sales or projects that don't move forward until the position is filled and the person is fully autonomous.
14Involuntary termination
Severance pay and continued insurance in cases of layoff or dismissal.
15Loss of clients and prospects
The business relationships that followed the departed person, sometimes all the way to a competitor.
16Customer dissatisfaction
Service that degrades during the transition, while the replacement gets up to speed.
17Uniforms
The clothing, equipment and materials to provide again with each arrival.
This cost isn't inevitable: most departures can be seen coming
Book a demoAmélio measures engagement, spots where things break down and equips your managers to keep your people. See, in a demo, how much you could save every year.
