Week 4 Discussion – Monday/Wednesday

The Cost of Losing an Employee

  1. Research on the internet the “cost in replacing an employee.” Cite at least two web sites where you found this information (copy URL into your response).
  2. Summarize your findings of components of cost that is part of the total cost to replace an employee.
  3. Discuss what options a company has to reduce different components you found in #2.
    • List the cost component
    • Identify how the company might try to reduce that cost  (for example, if the cost is “high recruiter costs,” the company might reduce this cost by stop using a recruiting agency and take on that function in their own Human Resources department if they have the resources to do it).
  4. Give your opinion on how a company can reduce “employee turnover” which will minimize costs in replacing employees.

Please number each response so everyone will be able to more easily identify and respond to each of the four components.


First Response is due by Wednesday, December 4th by 6pm. This response needs to be at least 200 words and contain 2 Links.

Second Responses (2) are due by Monday, December 9th by 6pm. These should be in response to two of your classmates and be at least 100 words.


20 responses

  1. 1.http://managemyemployees.com/the-cost-of-losing-your-top-employees/ This site gives the physical and emotional costs of losing an employee. http://www.americanprogress.org/issues/labor/report/2012/11/16/44464/there-are-significant-business-costs-to-replacing-employees/ this site gives the “digits” on how much it monetarily costs to lose an employee.

    2. This subject is near to me. I am looking forward to changing careers. However, I will be leaving a position I have had for almost ten years. I believe it depends on how you approach your business. Do you have a small business run on heart? The morale of losing a good employee may have more “cost” than the actual dollar amount. Lost Expertise, Lost customers and sales, Loss in productivity and lowered morale. If you approach with a business is business attitude you will look at the actual bottom line. The research I found stated that is costs from 10-30 percent of that person’s salary to replace them.

    3. The age old adage “Time or Money” When you loose a long term employee with knowledge I believe it is most detrimental. When a customer calls, they want to know the person on the other end of the line knows what their doing. They want an answer and the solution right now. I once heard that a vendor I deal with was bought out. Now that they had a new owner, he pays for a life insurance policy for the top guy for over a million dollars. Without the knowledge and experience of that guy, there is no business. In my opinion, the actual dollar amount of hiring a new employee or paying an agency will never out cost the loss of a knowledgeable long term employee.

    4. How does a company minimize employee turnover? I have learned that an interview is 75% soft skills and 25% hard skills. With that in mind I believe if you have a positive work environment, your employees will stay long term. It is not always about the money. The things I will miss most about my current company are small things with big heart. Last week we received $50 cash and a thank you note. This week the owner is flying in and cooking us lunch. “World famous chili” he claims. That is a big part of what has kept me here all of these years.

  2. 1. Sites I choose in my research :



    2. According to the first site I looked at losing an employee costs a lot more than people think, it weakens moral in the work place and also decrease productivity due to the face that you are losing an employee and you have to train a new one. I see this a lot in my current line of work, the turnover in the service industry is very high. People either leave because they want to make more money or they simply can’t handle the stress of the job itself. The cost of losing an employee can cost you up to six to nine months of salary. Which if an employee is making $50,000 a year it could cost you over $25,000 just to replace them.

    3. The second site was from CBS News and gave more detailed information on what percent you are actually losing when letting go of an employee. For example when an employee comes to you wanting a raise? Do you do nothing in risk of them quitting? Or do you give them a 5% raise? In this case you have to think about how much it would cost to lose that employee even if they are only an average worker. It would cost you almost 30% of that persons salary to replace them so in this case you would give them the 5% raise.

    4. To reduce cost of losing employees would be to simply make the ones that are there happy. Give incentives! No matter how small or large, people need to know that they are appreciated in the work place.

    1. Austin I really liked the first site you chose. It was extremely informative and had a lot of good facts and numbers that I couldn’t find on other sites. The answer to your second question was very relatable. I’ve worked a ton of jobs that had high turnover rates and I’m sure a lot of other people have too. There are so many people out of work. Companies fire people all the time cause there’s another hundred potential employees ready to work. Your answer to question four was very brief and although it was extremely accurate I think you could have gone into more detail.

    2. Austin your first site informs us quite well on the mental and physical loss of an employ which is exactly what dawn was looking for, and It shows exactly how much it cost and your second site went into percent’s and told exactly what was lost when you lose an employee. I also believe that if you keep your employees happy they will want to leave less and work harder than they were working when they weren’t happy. I have come to the conclusion from what you have found and that you have written that losing an employee is expensive

  3. 1. http://www.webpronews.com/employee-retention-what-employee-turnover-really-costs-your-company-2006-07
    2. For the first link it tells the cost to lose replace an employee at its highest to lowest amount for different positions, anywhere from 10,000 per person monthly to 50,000 monthly per person and up, also describes how to go about replacing employees by don’t replace to many because the cost could be too high and to organize the employees into skill and work effort levels to replace the lowest.
    The second link tells about the ends and outs of replacing employees and how many at a time why no to many and talks about how much each costs.
    3. The first link states you should replace as few people at a time as possible to save money loses also to save money to keep your top performers there and to take surveys on your top performers to find out why they are still there and what they feel makes them work as hard as they do to try to make the middle level performers have better end results.
    The second link says you should hire people that are right for the job as in they have natural tendency to do things just like the job calls for them to be done, also hiring the right person for the job elevates morale, increases production, and makes the work place more enjoyable for everyone.
    4. Not knowing much about jobs in general kind of makes this hard but my guess that to save money on replacing your employees is to find people that are hardworking and that can enjoy what they’re doing because most people that enjoy what they are doing will do really good on whatever it is.

    1. Calvin….I love the two sites you chose! The first one had an advertisement. I think you chose that one on purpose because of that. The second site was really cool. It was a pdf which was neat and it had a ton of information too. There were graphs and numbers but I have to admit, I didn’t read all of it. There are 28 pages and it’s something I would send to my boss if they wanted information about employee turnover. I thin that once you get some more job experience you’ll be able to answer number 4 better. There are a ton of hardworking potential employees and it’s not that hard for a company to find a good worker. Companies want people that will go above and beyond what there expected. You really have to shine for a company to hire you.

  4. 1: The Cost of Replacing an Employee;

    for jobs earning $30k or less, its costs about 16% of that employee’s salary to replace him, or roughly $4,800.
    For all jobs earning less than $50k per year, the cost of replacing an employee is fully 20% of that employee’s annual salary, or roughly $10,000.
    Losing an executive can cost up to 213% of that person salary. at an average of $167,280 annually, that means it could cost over $356,306 to replace them.

    2: Component costs to replace an employee;
    these are seperated into two different costs, Direct ones, and Indirect ones.

    2.a: Direct costs:
    • Separation costs such as exit interview, severance pay, and higher unemployment taxes
    • The cost to temporarily cover an employee’s duties such as overtime for other staff or temporary staffing
    • Replacement costs such as advertising, search and agency fees, screening applicants, physical and/or drug testing, interviewing and selecting cadidates, background verification, employment testing, hiring bonuses, and travel and relocation costs
    • Training costs such as orientation, classroom training, certifications, on-the-job training, uniforms, and informational literature

    2.b: Indirect Costs:
    • Lost productivity for the last few work days of the employee’s
    • Lost productivity due to hiring temp workers
    • Coping with a vacancy or giving other workers overtime, costs incurred as the new employee learns their job, including reduced quality, errors and waste
    • Reduced morale
    • Lost clients and lost institutional knowledge

    3: How can a Company lower the costs of employee turnover?
    Employee retention. A 10% reduction in employee turnover was worth more money than a 10% increase in sales, or productivity.
    Do what you can to keep your employee’s happy, and they will greatly contribute to the company.
    Focus on one form of employee searching, whether it be through an agency or advertising, but no more than one

    4: What can a company do to reduce employee turnover?
    • Talk to their employee’s. find out what keeps them there, why might they leave, what kind of competitive offers would they find attractive, and what they need to be happier and more productive
    • Hiring the right people from the start. A interview and select candidates carefully, make sure they not only have the right skills, but that they are a good fit for the company
    • Setting up the right compensation and benefits. Giving employees free sick days and vacation is much less costly than finding and hiring a new employee
    • Review compensation and benefits annually. This shows the employee that they are taken noticed of, and can increase morale and productivity
    • Pay attention to employees. Offer flexibility when able.
    • Social interaction and a rewarding work environment. Give them respect, and recognition and achallenging position from where they can learn and grow.



    1. Will I really like how you broke everything down from the websites, when you look at what it actually costs to lose an employee and think about just how much turn over can be in the workplace it can add up to a lot of money. If the earnings are 30k or less and 16% is the cost of losing that employee then you are losing $4,800. If you lost 4 employees one year that’s almost 20K, which is a lot of money taken out of the profit, and when you’re a business owner that could be the difference of being in the red or in the black that year.

    2. Will, the first post goes into percent’s and told exactly what was lost when you lose an employee and It shows exactly how much it cost and your second site your second site informs us quite well on the mental and physical loss of an employ which is exactly what dawn was looking for. I also believe that hiring the right people from the start reduces employee turnovers and paying attention to how employees work and act are very important. I have come to the conclusion from what you have found and that you have written that losing an employee is expensive

    3. I too liked how you broke everything down from the websites you chose. It really explains it well and very detailed. Good job. I do believe that keeping an employee happy would help lower the costs of employee turnovers. But the question is how? I do agree that finding the right person from the start would help out a lot. I do believe that maybe some type of skills test would help reduce the cost of employee turnover. It may seem kind of juvenile but I do believe it would show how much that person knows about the position they are applying for and to verify their skills.

      1. Actually they are out there, although they arent really “Skills” tests, but rather aptitude tests. they show how much one thinks outside the box, how a person thinks, and how they act. they arent really “popular” at the moment here in america, but in countries like japan, you cant get a job if arent “apt” in the areas a company needs the most. i, personally think it would be very effective here in america, along with some other policies from japan…but hey thats a story for a different time lol. and keeping emloyees happy is as simple as offering pay raises after certain amounts of time and so forth. the money you lose in the short term, can turn into a long term profit.

  5. 1. This is the first website I chose http://www.smartplanet.com/blog/bulletin/cost-to-replace-a-gen-y-employee-up-to-25000/ and this is the second website I chose http://www.cbsnews.com/news/how-much-does-it-cost-companies-to-lose-employees/.
    2. So the websites say that anyone earning a salary of 50,000 to 75,000 costs a company about 20% of their salary to lose them. People earning less than that, about 35,000 to 50,000costs them a little less, about 16%. I also found that while the cost of losing average employees is expensive, the cost of losing an executive is insanely high.
    3. There are many things that can be done to help reduce employee turnover and cost. Offering health benefits can significantly lower turnover. Giving a 1 to 2 percent raise or vacation time can help too. Promote entrepreneurship and entrepreneurship meaning find ways of offering incentives and rewards for an employee’s hard work. Using social media can help bring the cost of losing an employee down because you have access to a large group of mostly younger generations to recruit. The first site I chose even says that a management-free work place can even help.
    4. I think that giving people the option of having health care is a great way to reduce employee turnover. I also think vacation time helps a lot. Giving an employee some time off, especially paid time off, really helps with stress and tension in the workplace.

    1. 1. I do like he firs site you chose. I didn’t think that there would be much of a difference between the generations. It does make sense though. I am in the Gen-X category but I am also a long term employee. I look at it as a selling point.
      2. A benefit package is a great way to retain an employee. There are some companies that include that as part of your “salary.” Incentives or contests are a great way to make the work place more enjoyable. This will keep your staff happy and employed. I do not agree with a management free work place. There always needs to be a checks and balance.
      3. With my current employer we have a use it or loose it policy when it comes to vacation. They encourage you to take the time off. The owner understands the importance of time away.

  6. 1. The two websites I chose that explain the cost of losing an employee are;

    2. According to those websites, there are quite a lot of downsides to losing an employee. There are the costs of having to hire a new employee, the cost of training them, etc. There’s also lost productivity, maybe some customer dissatisfaction, etc.

    3. There are lots of ways to reduce the cost of the downsides to losing an employee. One example, to reduce the cost of training a new employee, is to hire someone whose only job is pretty much to train new employees. That way the training can go by faster and the employee will be better at their job in a smaller amount of time than if there wasn’t a specific trainer.

    4. There are probably a few ways to reduce employee turnover, but in my opinion the best way is to keep your employees happy and prevent them from wanting to quit in the first place. If you know that an employee is unhappy, see what you can do to make them stay and be happier with their job. If an employee wants a raise, it might be cheaper and more effective to just give them the raise than to lose them and have to deal with all the costs of losing an employee.

    1. Nice comments on everything, straight to the point and short I like that. You and I had the same outlook on keeping employees happy, I think that is one of the most important things an employer can do. In my current job they do not do things like that very often, they give us incentives when we hit our numbers like 25$ gift cards. But a lot of the people I work with, myself included would just like to hear a thank you every now and then, or a good job! Most people would stay at their jobs longer if the just felt appreciated, and a raise would be good too! Two years of being told you were going to get a raise and you never did, this will make employees unhappy, promising them things they may or may not get. Not very professional.

      1. Yeah, I think thank you’s and whatnot would go a long way with employees. Little perks like giftcards are okay, but treating employees like actual people would be a really good thing, too. I definitely agree that if employees felt more appreciated they would stay longer. And it must feel awful to be told you’re going to get a raise and then you keep not getting one. You’re right about it not being professional, and if employers and whatnot would just think of this, I think they could keep their employees a lot happier and stop them from leaving. It costs more to lose an employee than to give them a raise and keep them happy.

    2. Yvonne
      1.I liked the websites you chose. There is a ton of details and facts to read about. I like that they put everything aspect into charts and graphs as well.
      2&3. I wish my company had a specialized trainer. I am training a new employee right now and it takes away from my productivity. It also takes away from his when he feels like he is asking too many questions. I agree that it is going to take much longer for me to train him and keep up with my daily job duties than it would if we had a specific trainer.
      4. It is not only about keeping your employees happy. It is having an approachable supervisor or mentor. If they are not approachable one would never know an employee was unhappy. I am very grateful that my employer is such a company.

      1. Oh, the approachable supervisor thing didn’t occur to me! I totally agree, though. If your supervisor is intimidating you’re not going to want to come up to them and say anything or ask for something, especially if you have a request and you think it’ll get turned down. And unhappy employees definitely wouldn’t want to say anything…not politely, anyway. An approachable supervisor would make asking questions easier and make for a more relaxed environment in the workplace. Having an approachable supervisor would make employees happier in general I think, since if they had a problem they’d feel better going to them about it. Thanks for mentioning it!

    3. I agree with the sites you chose. They were very informative and detailed. It explained the cost of losing an employee very well. It would be awesome if there was a specialized trainer but then again I don’t think they would get the same kind of training needed for the hands on part of the job especially in the kind of job I have. Hands-on training is the best way to learn the ends and outs of the position. Also, if there are any shortcuts I think it’s best to hear from the person working on the line that knows the ins and outs of that particular situation. I do believe that telling someone that they are doing a good job is one way to keep them happy instead of hearing negative feedback all the time.

  7. 1.The two sites I chose are http://www.americanprogress.org/issues/labor/report/2012/11/16/44464/there-are-significant-business-costs-to-replacing-employees/


    2. Consider this: if your firm has a turnover rate of 25% (about the national average) and employs 40 employees each earning $25,000 annually, your costs of turning over 10 of these employees over the course of a year will be at least $125,000! What could you do with an additional $100,000+ in resources?
    Severance pay can also be a huge part of employee turnover costs. This is especially true with highly skilled employees and high-level management. These are wages on which you will never see any return on you investment!
    The costs of recruitment: Each time an employee is lost the hiring and selection cycle must start again. These costs can be significant: advertising costs to announce your job opening to the masses, cost of recruitment agencies, background checks, reference checks, drug testing, cost of overtime pay, temporary help and much more.
    Hiring costs: Once you’ve made a hiring decision, the costs of turnover don’t stop, but rather continue. Sign on bonuses, relocation costs, and any increases in salary level necessary to attract new talent all add up quickly. The time spent by HR managers to onboard and train the new employee can also be costly and unnecessary. These are all tangible costs that could be avoided with a better employee retention strategy
    3. The costs of employee turnover can be staggering, ranging anywhere from 1/2 to 5 times an employee’s annual wages dependant upon his or her position. It is neither possible, nor desirable to completely eliminate turnover from your organization. Some of the costs associated with employee turnover are unavoidable and must be expected to occur in the normal course of business. Before you can start to combat the costs of employee turnover, you must be aware of what these cost are and what they entail. There are, of course, some obvious costs that come quickly to mind, but there are also numerous other costs that you may have never considered that can have a serious impact on your bottom line.
    4. I believe there are several ways of reducing employee turnover. One is to offer skill testing to determine whether you have found the best fit for each position your company has open. Not only that, but it also cuts down on your new applicant recruitment costs. Show appreciation. Many employees almost always know when they are doing something wrong. However, these same employees very rarely ever hear from their employers when they are doing their job right. Encourage your employees by saying kind words to them, and telling how much of a good job they are doing. If you do that, they will be more likely to accept any words of advice on how to improve their work later.

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