Incredible Math for Employee Turnover . . .and other revelations

Forbes had a great article with statistics that will make you stop and think.

  • In 2014 an employee given a 3% raise really only gets a 1% increase in spending because of inflation
  • If that same employee leaves the company they can look forward to a 10% to 20% increase in salary (with some as high as 50%)

This is a call for HR to rethink their methods.

If that employee does leave consider

  • The replacement costs for an entry-level employee is between 30% to 50% of their annual salary.
  • For mid-level employees it could cost up to 150% of their yearly salary for replacement
  • For those high level/specialized folks . . . a whopping 400% of their annual salary.

Moral of the story

  1. Fix your managers.  People leave 9 times out of 10 because the boss is a jerk.
  2. It costs less to keep your employees than to replace them.  Fix your training.   Give new skills.  None of this hurrah, feel-good motivational stuff.  Educate for some serious new abilities.
  3. Get serious about pay raises.  The person who gets the 3% increase, who also knows a departure will get them 10 TIMES MORE will just fester at the lack of competitiveness as the business values the company above it’s employees.  Note: I am not saying to bankrupt the company by giving massive pay increases.  I am saying, know who your talent is and take care of them.  If needs be, reread #1.

Note:  Kudos to Karlyn Borysenko for her great work: the Cost of Employee Turnover.


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