How much does it really cost to lose a good employee?

We talk to potential candidates every day, and in our experience, as many as 7 out of 10 employees are actively monitoring the job market and thinking about changing jobs. The most common reasons? Low salaries, poor interpersonal relationships, a disrupted work-life balance, and a lack of motivation. Thinking about changing jobs has become an almost everyday occurrence, while only a small portion of employees do not even consider such an option.

A significant portion of employees are not just thinking about it, but are taking concrete steps: reviewing job advertisements, updating their resumes, and going for interviews. In other words, a large portion of the workforce is not just passively dissatisfied but is on the verge of leaving. The question is no longer whether employees will leave, it is now how much it will cost the company.

The departure of the old, the arrival of the new? It's not that simple anymore.

In most companies, employee turnover is seen as a normal part of business. Someone leaves, someone new comes in, and the business moves on. But when a good employee leaves an organization, the consequences are much deeper and more costly than they first appear.

The problem doesn’t start the day an employee leaves. We asked candidates about their experience with the decision to leave: the problem starts much earlier, when a person loses motivation. One of the key reasons for leaving is a lack of opportunities for development and education. Additional common reasons include poor leadership style, feeling that their work is not appreciated enough, being overwhelmed, and looking for more meaningful work. In other words, people rarely leave for no reason; they leave when they stop seeing the value in what they do.

What about the obligations of a departing employee?

When an employee leaves a company, a void is created that is not only operational but also organizational. The job does not disappear but spills over to the rest of the team. Deadlines are pushed back, the quality of work drops, and the remaining employees take on additional workload. At the same time, the process of finding a replacement begins, which includes advertising the position, selecting candidates, and a series of internal interviews. All of this takes time, and time is money. According to our experience and estimates, the cost of replacing an employee is on average about 21% of their annual salary, and for more complex positions, this amount can be significantly higher.

You have found a new person, and now all your problems are solved. Unfortunately, it is not that simple. Even when a new person is found, the cost does not stop: the new employee does not come with a complete understanding of the processes, relationships, and ways of working. It takes months to become independent and even longer to reach his full potential. During this period, the organization actually invests more than it gets. In addition, with the departure of an experienced employee, what is most difficult to replace is lost, which is experience, context, and informal knowledge that has never been written down.

The problem is additionally represented by the very perception on the market. Companies with high employee turnover have a harder time attracting quality candidates because the best talent is looking for a stable and healthy work environment. If an organization fails to retain people, it becomes a clear signal to the market, which in the long run increases the cost of employment.

The key to staying? Motivation.

All of this further demonstrates how crucial employee engagement is. A significant portion of the candidates we interview report that they perform tasks at work without real involvement or a sense of connection to what they are doing. This not only means a higher risk of turnover but also lower productivity while they are still with the organization.

On the other hand, companies with engaged employees achieve significantly better results, recording up to 147% higher revenue compared to the competition—with fewer errors, less absenteeism, and a significantly lower turnover rate.

When we add up all the important factors, from recruitment and training to lost productivity to the impact on the team and reputation, the real cost of employee turnover often reaches between 50% and 200% of that person's annual salary. It is a cost that is rarely seen in a single line item but is very much felt in the business results.

How to prevent the trend of departures in advance?

That's why more and more companies are starting to think differently about people management. Instead of reacting when employees leave, the focus is shifting to how to keep them. Investing in development, quality leadership, flexibility, and a working atmosphere is no longer seen as a cost but as an investment.

So how do you know what to offer an employee to stay in their job? One of the items is certainly the salary benchmark, which helps to check the real market situation for any position, as well as information on whether current salaries are competitive. In this way, companies can make fairer, safer, and strategically better decisions about salaries and benefits.

In the long run, dissatisfied employees always cost more than satisfied ones. In the end, the most expensive employee is not the one with a high salary, but the one who leaves when he could have stayed.

Want to prevent this from happening to your company? Contact us here!