How much does employee turnover really cost?

Many managers have the mindset that they can find replacements easily. If you don't do the job, there are 5 people lining up for this position. They don't realize the cost of turnover, partially because it is hard to quantify the cost. In the good old days, IBM and other blue chips would spend lots of money and send employees back to school and train them well. Nowadays, everyone is considered to be replaceable.

It depends on a lot of factors including but not limited to: age of company, industry, how much tribal knowledge this person possesses and estimated ramp time. As an example: a 2 year old tech company, an employee that's been around since inception and possesses a lot of quirks and random information in their head, it's going to cost the company a shit load of money.

Two thoughts:

* It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was once at a company where an entire (small) team slowly left after a single person departed. Perhaps any individual's departure could have been handled without too much of an issue, but the loss of entire team and all the institutional knowledge contained there was quite damaging to the company.

* The article mentions some tips for retaining employees and I think they are spot on. But I don't think it emphasizes the importance of salary enough. A lot of employees jump ship because of the higher salaries they can get when they move around. Meanwhile, the original company they left will likely have to pay market rate to get someone with similar experience (and none of the institutional knowledge), so they would have been much better off if they would have just bumped their employee's pay to market rate in the first place. By the time it gets to a counter-offer stage, it's often too late.

EDIT: The article briefly mentions the importance of paying market rate salary, but I missed this sentence when I read it over the first time. Updating my second bullet accordingly.

It mentions that market rate salaries are table stakes.

So view market-rate compensation simply as table stakes, and spend your energy focused on the next level of Maslow’s hierarchy of employee happiness: opportunities for growth, the ability to have impact towards a purpose, and a caring environment that makes them feel valued.

> "Instead, focus on growth, impact, and care"

Since a lot of tech companies employ young talent (relative to other industries), this video by Simon Sinek on "Millennials in the Workplace" can be enlightening:

https://www.youtube.com/watch?v=hER0Qp6QJNU

Forewarning, he goes off the deep end on a few points, but IMO the general ideas are valid.