~1 min read
Employee turnover is one of the most underestimated costs in business. Studies by SHRM (the Society for Human Resource Management) and Gallup consistently put the true replacement cost at 6–9 months of annual salary for typical roles, rising to 200% for senior or highly specialised positions.
Turnover cost components
| Component | Typical cost |
|---|---|
| Separation (HR admin, exit interview, severance) | 3–5% of annual salary |
| Vacancy (lost productivity while role is open) | 50–150% of daily wage × days |
| Recruiting (job boards, agency fees, interview time) | 5–30% of annual salary |
| Onboarding and training | 10–20% of annual salary |
| Ramp-up time to full productivity | 25–50% of annual salary × ramp months |
SHRM benchmarks
- Entry-level / hourly: ~50% of annual salary
- Technical / professional: 100–150% of annual salary
- Senior / executive: 200–400% of annual salary
Reducing turnover cost
High-impact levers: structured onboarding (cuts ramp time by 50%), manager effectiveness training (the #1 driver of voluntary attrition), competitive compensation benchmarking, and stay interviews rather than exit interviews.