The cost of employee turnover

Count the full cost of a departure

Recruiting is usually the most visible expense. Covering an open position and bringing a replacement up to full productivity can cost considerably more. SHRM's 2025 benchmarking reported an average direct cost per hire of $5,475 for nonexecutive positions, compared with nearly $4,700 in its 2022 benchmarking. Include these five areas in your estimate.

1. Separation. Accrued vacation payouts, applicable severance, offboarding administration, and measurable productivity changes during the notice period.
2. Vacancy and coverage. Overtime, temporary staffing, delayed projects, missed revenue, and work reassigned to other employees.
3. Recruiting. Advertising, interviews, background checks, assessments, and recruiter or agency fees. Agency fees can run 15% to 25% of salary.
4. Training and ramp-up. Onboarding, equipment, training time, and reduced productivity while the replacement learns the role. This can take three to six months, or longer for complex positions.
5. Lost knowledge and relationships. Business knowledge, customer relationships, and team expertise that take time to rebuild.

Together, these five costs give you a fuller picture of what each departure costs. Comparing the total with annual salary also helps you see which positions have the greatest financial impact.

Plan for replacement costs of 50% to 200% of salary

Gallup estimates that replacing an employee can cost between half and twice their annual salary. SHRM reports a similar range of 50% to 200%, depending on the position. SHRM also estimates that finding and training a salaried replacement costs six to nine months of pay. The broader replacement estimate includes vacancy costs, lost productivity, and other business impacts. These ranges provide a starting point for your budget. Your own hiring costs and experience will give you a more precise estimate.

The position makes a difference. Frontline positions may take less time to fill and train for, while finding an experienced leader or specialist can take months. A longer training period, specialized knowledge, and customer relationships can add to the cost. Here is how replacement costs can differ by position.

Frontline and hourly positions Around 0.5x

Shorter hiring and training periods generally keep replacement costs near the lower end of the range. Frequent departures can still create a substantial annual expense in high-volume positions.

Professional and skilled positions 0.5x to 1.25x

Specialized skills can mean longer searches and more training time, increasing vacancy and productivity costs.

Managers and specialists Up to 2x

Longer searches, higher recruiting fees, and the time needed to rebuild expertise and relationships can increase replacement costs.

Senior leadership and executive positions 2x and up

Executive searches, extended transitions, and the transfer of business relationships and institutional knowledge can push replacement costs above twice annual salary.

Estimate the cost for a $60,000 role

Consider a position paying $60,000 a year. Using the benchmark range, replacing that employee could cost between $30,000 and $120,000. The estimate depends on hiring difficulty, training time, and lost productivity.

$30,000

Lower estimate: 0.5x salary. Assumes a shorter search and training period. SHRM's separate six-to-nine-month estimate for finding and training a salaried replacement would equal $30,000 to $45,000 at this salary.

$120,000

Higher estimate: 2x salary. Assumes a longer search, more extensive training, and greater productivity and knowledge-transfer costs.

The same benchmark produces different replacement costs across these three positions.

For a company with 100 employees, an average salary of $50,000, and 15 departures per year, this range produces an estimated annual turnover cost of $375,000 to $1.5 million. Gallup estimated in 2019 that voluntary turnover costs US businesses approximately $1 trillion annually.

Learn what makes employees stay

In Gallup's 2024 study, 42% of voluntary leavers believed their manager or organization could have helped them stay. Another 45% reported that neither a manager nor another leader had discussed their job satisfaction, performance, or future with them during the three months before their departure. Gallup's 2019 study reported 52% and 51%, respectively.

Start with a stay interview. Ask employees what they enjoy about their work, what might lead them to consider another opportunity, and what would make their experience better. End the conversation with a clear next step, someone responsible for it, and a date to follow up.

Budget for employee turnover

Include expected employee departures in your annual staffing and financial plans. The Bureau of Labor Statistics tracks voluntary departures through the quits rate in its Job Openings and Labor Turnover Survey. In June 2026, the monthly quits rate was approximately 2%, representing roughly 3.2 million quits. During the 2021 and 2022 peak, the rate approached 3%, with approximately 4.5 million quits in some months. The rate has remained near 2% since mid-2025.

Use expected departures to budget for recruiting, vacancy coverage, and training. Track voluntary departures separately from layoffs so you can measure the impact of retention efforts.

Make your turnover estimate more accurate

• Include the full replacement cycle. Add vacancy coverage, training, and reduced productivity to your recruiting expenses.
• Match your assumptions to the position. Hiring and training costs can differ significantly between a frontline employee and a senior specialist.
• Identify which departures cost the most. Measure the impact of losing strong performers, employees with specialized skills, and people in positions that take longer to fill.
• Make retention part of regular manager conversations. Regular conversations give managers a chance to hear concerns and respond while employees are still considering their options.