True Cost of Losing Employees

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“Always treat your employees exactly as you want them to treat your best customers.” Stephen R. Covey

One of the largest costs to a business is the loss of employees.  There are many intangible and unmeasured expenses as a result of employee turnover.  This makes it one of the hardest costs to measure and therefore to predict.

We believe this is especially true when key individuals leave the company.  People leave for many reasons. They include retiring, moving, changing their career goals and many others.  No matter what the reason is, the cost of the loss of even one employee can be devastating to a business.

Employee Cost Research

Human Resource studies show that it costs a minimum of six to nine months of salary to replace a salaried employee.  “For a manager making $40,000 a year, that’s $20,000 to $30,000 in recruiting and training expenses.”  For high-level executive positions, the cost can be as high as twice their annual salary.


Source: Center for American Progress

Cost Indicators

The cost of losing one employee can be staggering for the reasons shown below:

  • New hiring costs including advertising, interviewing, screening and testing.
  • On-boarding expenses including training and managers’ review and consulting time.
  • Loss of productivity as a new employee learns the job of a previous employee.
  • “Wisdom Withdrawal” is knowledge taken with an employee that was not documented with proper procedures before that person left.


Source: Center for American Progress


Multiple Department Collaboration

It takes several different departments such as Human Resources, Finance, Operations and Administration to track recruiting, interviewing, hiring, orientation, training, productivity loss, customer dissatisfaction and loss of sales’ expenses.  Many companies do not have the proper systems in place to collect, document and analyze employee turnover expenses accurately.

Employee Retention Best Practices

We have found the most successful companies use proven retention strategies and industry best practices to recruit and retain their most productive employees.  Some of those procedures are as follows:

  • Measure your retention and exit rates.
  • Constantly strive to improve your employee training programs, incentives, and benefits.
  • Encourage employee feedback and a culture of life-long learning.
  • Conduct exit interviews and make improvements based on what you learn from them.

How We Can Help You

Pacific Crest Group (PCG) provides professional services that keep your business focused on your critical objectives.  We provide strategic Accounting and Human Resource (HR) services created specifically to help you meet your goals. Through exemplary customer service, clearly defined policies and procedures as well as a forward-looking perspective, we provide the outsourced solutions your business needs to grow. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed to maximize all of your business opportunities.



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