Understanding the True Cost of Employee Turnover

Employee turnover is more than just a staffing inconvenience; it’s a hidden cost that can take a significant toll on your company’s bottom line. Whether it’s due to a poor culture fit, lack of career growth, or inadequate benefits, losing employees and having to replace them again and again is a cycle that drains both time and resources.

The Real Cost of Turnover

According to SHRM, it can cost an employer up to six to nine months of an employee’s salary to replace them. That includes recruiting, onboarding, training, lost productivity, and the impact on team morale. For a $60,000/year employee, you’re looking at a turnover cost of roughly $30,000–$45,000. Multiply that by multiple positions per year, and the financial hit is hard to ignore.

But the cost isn’t just monetary. High turnover disrupts operations, places added pressure on existing staff, and can damage your company’s reputation among both customers and potential hires.

Why Employees Leave: The Benefits Factor

While compensation and management style certainly play a role, a lack of competitive benefits is consistently listed among the top reasons employees seek new opportunities. If your benefit offerings are bare bones, confusing, or don’t reflect the needs of a diverse workforce, employees may feel undervalued and start looking elsewhere.

Common benefit-related complaints include:

• Lack of affordable health coverage

• No access to dental, vision, or mental health support

• No flexibility (e.g., HSAs, ICHRAs, or remote care options)

• Limited or no voluntary benefits, like disability or accident insurance

Better Benefits = Higher Retention

When employers offer meaningful, flexible benefits, employees feel more secure and supported. That security translates to greater satisfaction, loyalty, and long-term retention. Even modest improvements, like adding voluntary benefits or better communicating existing ones, can make a measurable impact.

Investing in employee benefits isn’t just a feel-good initiative; it’s a smart business strategy. By prioritizing well-designed, employee-centered benefit packages, companies reduce costly turnover, improve morale, and build stronger, more resilient teams.