Losing an employee can be a devastating experience for your business—not just on an emotional level where you lose someone who was integral to your company’s growth but also in a financial sense. For instance, the SHRM study shows that it can cost six to nine months salary to replace an employee who leaves. So for a person who makes $40,000 annually, that would be between $20,000 and $30,000 in recruitment and training costs for a new employee.
There are studies that say this is actually a higher cost, though, such as the CAP study. The CAP study found the following statistics in hiring a new employee:
- “16 percent of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). For example, the cost to replace a $10/hour retail employee would be $3,328.
- 20 percent of annual salary for midrange positions (earning $30,000 to $50,000 a year). For example, the cost to replace a $40k manager would be $8,000.
- Up to 213 percent of annual salary for highly educated executive positions. For example, the cost to replace a $100k CEO is $213,000.”
Additionally, a study by the Center for American Progress that it can cost between 100 percent and 300 percent of the base salary of the person who is being replaced.