How to find out how much employee turnover costs you

Employee turnover is a problem many postpone: who cares if people leave, as long as recruiters fill spots quickly? If you think this way, try calculating how many hundreds of thousands, millions, or even billions you're losing to churn. Let's break down how to assess its economic impact and, more importantly, how to combat it.

Let's Start with the Numbers

Let's take a mid-level Python developer with a salary of 250,000 rubles as an example. We'll place them in an ideal scenario: imagine they resigned after taking all their accrued vacation, and no additional compensations were required.

Disclaimer: In the first section, I detail where money goes when replacing an employee. If you're not keen on reading these calculations and just want the final figure and how to work with it, feel free to skip to the end of the section.

Handing Over Responsibilities

Typically, an employee who submits a resignation notice spends another two weeks handing over their duties. If there are 21 working days in a month, you'll spend 177,882 rubles on this—this includes 10 days of salary, taxes, pension, mandatory health insurance, and temporary disability benefits.

Add to this the associated costs for the workspace, equipment, accounting, administrative tasks, and various minor expenses. The size of this sum depends on the office itself, its area, location, number of workstations, and many other parameters: colloquially speaking, whether you're in the City with cosmic voluntary health insurance and the latest iMacs—or somewhere in Khimki in a ten-by-fifteen box.

Let's take a medium-sized Class B office in Moscow as an example. For this, associated costs would be about 25,000 per month, so for 10 days, that's 11,904 rubles.

Finally, someone needs to take over these responsibilities. Let's assume an employee with the same salary did this and spent a week on it. That's another 88,941 rubles from your budget. In total, the handover of duties cost you 278,727 rubles.

Handover costs

278,727 ₽

• Departing employee (10 days) · 177,882 ₽
• Workspace & overhead (10 days) · 11,904 ₽
• Colleague accepting duties (5 days) · 88,941 ₽

Hiring a New Employee

Next, let's calculate the costs of recruiting a new developer.

The average cost-per-hire (CPH) in the IT business this year was 53,432 rubles. This includes using HeadHunter, Habr, Podbor.io, and the recruiter’s salary, including taxes and fees.

Let’s add a 1.5-hour technical interview involving two leads with salaries of 400,000 rubles, and another interview with a lead-to-be manager and two team members (for whom we'll use the median IT specialist salary in Moscow for large businesses – 275,000 rubles).

For convenience, let's calculate the hourly cost for each: 4303 rubles for a lead and 2958 rubles for a team member.

Suppose five candidates made it to the first interview, and two to the second. To conduct these, you spent a total of 95,202 rubles on the working time of leads and team members.

One of the candidates accepted the offer. By this point, you've paid 148,634 rubles for the recruitment process. And this is assuming no need to present candidates to other teams, no need for a second sourcing iteration if no one fit from the first, and very few people even made it to the interview stage.

Hiring costs

148,634 ₽

• Cost-per-hire (CPH) · 53,432 ₽
• Interviews (leads + team time) · 95,202 ₽

Onboarding

And once again, we dive into our sterile conditions: the new developer passed the probationary period, adapted without issues, made no costly mistakes, and started paying for themselves after a month and a half.

But even in such a situation, the tech lead and product manager need to onboard the new employee during these one and a half months. They spend 5-10% of their time on this, averaging to 7.5%. This totals 154,908 rubles—the cost of their working time spent on adaptation.

And this is without factoring in the costs of onboarding activities, welcome merchandise, mentors, and so on.

Let's add the employee's salary for one and a half months (remember, they aren't generating value during this period yet)—533,646 rubles with all taxes and fees.

As a result, 688,554 rubles have been spent on adaptation.

Summary

The total expenditures for handing over responsibilities, finding a new employee, and onboarding them amounted to 1,115,915 rubles.

Total replacement cost

1,115,915 ₽

Now, scale this up to your company's size: calculate how many employees left in a year (month, quarter, whatever is convenient) and multiply by the resulting sum. For example, if you have 5000 employees and 15% leave annually, turnover costs you 836.9 million rubles per year.

In reality, the calculations are somewhat more complex because replacing an IT specialist costs more than a rank-and-file employee in a non-IT profession—but I remind you that we considered a sterile situation without project downtime, onboarding failures, lengthy searches, and so on. So the final sum could be even higher. Not long ago, I worked with a company that lost as much to employee turnover in a year as "Transaero" airplanes were being sold for on Avito at the time.

Average Across the Board

Of course, zero turnover is a pipe dream, so there will always be costs associated with it. The question is whether they fit within the norm and if they can be reduced.

To answer the first question, you need to compare your figures with industry, regional, and professional averages, as the "norm" varies greatly across different fields. If half the call center staff leaves in a year, that's quite normal: few people view this job seriously or long-term, not to mention its stressful nature. However, if half your IT specialists flee in a year, that's cause for alarm.

Turnover benchmarks by industry

• Call centers · 40–50%
• Retail · 30–40%
• Manufacturing · 15–20%
• IT · 10–15%
• IT (50%+) · 50%+⚠️

Source: happy-job.ru

Even if your turnover aligns with the industry average, it's no reason not to address it—as it directly impacts your business's financial performance. Returning to our example: if a company finds a way to reduce turnover from 15% to 12% per year, it will save 167.5 million rubles. Knowing this figure, you can calculate the economic justification for investing in HR activities aimed at reducing turnover.

Money, Management, Career Stagnation

So, we've calculated the turnover percentage and its monetary cost. Now we need to figure out why people are leaving you in the first place. Low salaries, poor organization of processes, toxic colleagues, inadequate management, constant overwork, lack of remote work, problematic clients, and so on—there could be a myriad of reasons. If we turn to statistics, we can look at a recent study on the most common reasons for leaving large companies. Low pay came in first, followed by a lack of career growth opportunities, and problems with professional fulfillment ranked third. Poor management also made it into the top reasons.

How do you gather your data? Conduct exit interviews and ask employees about their reasons for leaving, run anonymous surveys, and personally talk to specialists. The results should be summarized separately for each department, as each may have its own turnover factors. For example, in one, the boss yells at subordinates; in another, people work without days off; and in a third, the team is constantly at odds. Ultimately, everyone leaves, but for different reasons.

Then these reasons need to be analyzed for objectivity. If employees leave because they want more money, you need to find out: are you really underpaying? What's the average market rate? Is money truly the main reason? And finally, if you raise salaries, will these expenses be offset by a reduction in turnover? Only after you've answered these questions can you take action: award bonuses, fire managers, revise the career growth system, combat overwork, promote remote work, and so on.

Action plan: reducing turnover

• 01 · Measure · Calculate turnover rate and its cost in money
• 02 · Diagnose · Exit interviews, anonymous surveys, 1-on-1 talks
• 03 · Analyze by department · Each team may have different reasons
• 04 · Verify objectivity · Compare with market, check if causes are real
• 05 · Act & track · Implement changes, keep measuring regularly

And to understand if you are going in the right direction, continue to regularly measure the outflow. If it starts to decrease, you are on the right track. If not, perhaps you are doing something wrong, and then you need to analyze the situation again.

Predicting Turnover

Understanding the economic impact of turnover is also useful because it informs management decisions. Thus, when changing top management, rewriting company policy, or adopting new technologies, you inevitably provoke the departure of some employees. This is the natural price a business pays for any major change. But knowing its monetary equivalent allows you to see if your decisions will pay off.

However, to do this, you need to be able to predict how a particular reform will affect turnover. You'll have to regularly gauge team morale, communicate with employees, conduct surveys, analyze the experiences of companies that have implemented similar changes, and hire consultants. Then you can roughly understand how many will disagree, in which departments, who among them will leave, and how much it will cost you.

You can predict employee turnover not only before major changes but also for specific months. For instance, in companies that pay annual bonuses before the new year, most people leave in January. In my experience, there was a case where the bonus was paid in spring, so mass resignations occurred in April-May. This severely impacted projects lacking manpower and the HR department, which had to operate under intense pressure. When the company divided the annual bonus into quarterly payments, turnover became more evenly distributed. That is, its magnitude remained the same, but dealing with it became easier.

In other words, forecasting turnover helps you prevent it or prepare in advance—depending on whether the impending losses fit your business model.