In the USA employee turnover averages about 12% (and in the call center industry about 35%) and about 75% of “new” hiring is done to replace an employee who left, according to a 1996 study by William H. Pinkovitz, Joseph Moskal and Gary Green. Of course this was well before the current economic meltdown and certainly turnover has declined as people cling more tightly to the “security” of a paycheck. But downturns end and we can expect the numbers to trend back toward their typical values, possibly after a post-recession “spike” as people begin to bail out of jobs for ones they consider better.

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The cost of all this to a company is commonly estimated at about 150% of annual wages/salary (and 200%+ for sales and managerial positions), but obviously this will vary from industry to industry and even company to company within an industry group. In his article “The Cost of Employee Turnover“, William Bliss, President of Bliss & Associates, a Wayne, NY consultancy has enumerated the various components of turnover costs and concluded that replacing a $50,000 a year employee can easily cost a company $75,000 or more. Any way you slice this cake its big money.

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But what does this mean to you? What are your numbers? The Pinkovits, et al article provides a nice cost calculator that you can use as a starting point to make one of your own. Its worth the effort. It might just be a real eye opener.