The Real Cost of Employee Turnover

Employee turnover isn’t just an HR problem—it’s a financial one too. When employees leave, it costs time, money, and productivity. For Fractional CFOs and business owners, understanding the full cost of employee turnover is key to protecting profits and keeping things running smoothly.

What Does Turnover Really Cost?

When an employee leaves, the cost can come from several places:

Type of Cost	What It Means	Average Impact
Hard Costs	Hiring, training, lost time before new hire is up to speed	50–200% of annual salary
Soft Costs	Losing experience, slowing down team productivity	10–30% of team performance
Missed Opportunities	Lost sales, delayed projects, less innovation	15–20% of role’s output

These numbers can add up quickly—especially in industries where employees leave often.

Where Turnover Hurts the Most

Some industries feel turnover more than others. Here’s what it can look like:

Food Service:

• Workers stay less than 2 years on average
• $5,800 to retrain each employee
• 34% dip in productivity during training

Sales:

• Losing a salesperson can cost $112,000 in missed sales
• It takes 6–12 months for a new hire to catch up

Healthcare:

• Replacing a registered nurse (RN) costs around $47,000
• Fewer nurses means fewer patients can be seen

Turnover by the Numbers

If a business has 100 employees and 30% leave each year, here’s a rough breakdown:

• Hiring & Training Costs: $1.2 million annually
• Productivity Loss: $1.8 million from slower work during new hire training
• Mistakes & Delays: 14% more errors in important tasks
• Revenue Drops: 9% dip in sales during open roles

What Can You Do About It?

Reducing turnover starts with understanding why people leave and how to keep them longer. Here are some ideas CFOs and business owners can consider:

• Predict Turnover: Use employee data to spot who might leave soon
• Capture Knowledge: Use systems that help keep what employees know even after they leave
• Budget Smart: Put money toward keeping good employees, not just hiring new ones
• Spread Training: Cross-train teams so others can jump in when someone leaves

The Value of Stability

In industries where people stay longer, businesses do better:

• Skilled trades: Higher efficiency when people stay 3+ years
• Law firms: Lower legal risk and fewer compliance costs

How Engaging a Fractional CFO Can Help

A fractional CFO can help you see the hidden cost of employee turnover and make a plan to lower them. They’ll work with your team to:

• Map out where turnover is costing the most
• Help shift budget from hiring to retention
• Find ways to use low turnover to get better loan rates or insurance terms

Reducing employee turnover isn’t just good for morale—it’s good for your bottom line. Every 10% improvement in retention can boost profit margins by more than 1%. That’s money worth holding on to.