Turnover cost includes separation, recruiting, hiring, onboarding and training, plus lost productivity while the role is vacant and while the new hire ramps up. Gallup has estimated the cost of replacing an employee at one-half to two times the employee’s annual salary. Calculate your own figure, then invest in onboarding and role training to reduce early exits.
What goes into turnover cost
| Cost category | Examples |
|---|---|
| Separation | Exit processing, final pay administration, unemployment insurance impact |
| Vacancy | Overtime for coverage, temp labor, lost output or sales |
| Recruiting | Job ads, recruiter time or fees, interviews, background checks |
| Onboarding | Paperwork, orientation, equipment, uniforms |
| Training | Trainer and supervisor time, courses, materials |
| Ramp-up | Lower productivity while the new hire learns; errors and rework |
A simple calculation
- Add up direct costs per hire (ads, fees, checks, equipment, training).
- Estimate vacancy cost: days vacant × daily overtime or lost output.
- Estimate ramp-up cost: weeks to full productivity × weekly pay × average productivity gap (for example, 50%).
- Add them together for the cost per departure.
- Multiply by the number of departures per year.
Use our training ROI calculator to estimate how much faster ramp-up and lower early turnover are worth.
Where turnover hits hardest
Early turnover, people leaving within the first 90 days, is especially costly because you pay to recruit and train without getting full productivity in return. It is often driven by unclear expectations, poor onboarding and a job that differs from what was described.
How to reduce it
- Write accurate job descriptions that describe the real day-to-day work.
- Use structured interviews and realistic job previews.
- Provide consistent role training from day one.
- Use 30-60-90 day plans with scheduled check-ins.
- Show a career path and support credentials.
Frequently asked questions
How much does it cost to replace an employee?
It varies by role. Gallup has estimated one-half to two times annual salary when all costs are included. Calculate your own figure using your actual recruiting, training and productivity costs.
What is a good turnover rate?
It varies widely by industry. Track your own trends by role and focus especially on first-year and 90-day turnover.
Keep reading
How to Reduce New-Hire Turnover in the First 90 Days
Why new hires leave in the first 90 days and how to keep them: realistic job previews, structured onboarding, role training, buddies, check-ins and clear paths to higher pay.
How to Measure Training ROI
How to measure the return on investment of employee training: choosing metrics, establishing baselines, calculating ROI, and presenting results to leadership, with a free calculator.
How to Create an Employee Onboarding Program
A practical guide for employers to build an onboarding program: pre-boarding, day one, role training, safety, 30-60-90 day plans, buddies, check-ins and how to measure results.