How to think about the cost of employee turnover

How to think about the cost of employee turnover

It’s time to start thinking critically about how to increase employee retention.

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All Resources How to think about the cost of employee turnover

Employee turnover is expensive.

People instinctively sense this; we’ve all felt the pain of a superstar leaving, the cultural challenge associated with the departure of a beloved employee, or even just the painful gap that is left behind by an employee who was doing an important job well.

But most people have no framework for quantifying this cost, or they never even bother to try.

The problem with this is that people tend to optimize what they can measure. Doctors believed that cigarettes were bad for human health as early as the 18th century, and scientific studies about the link between smoking and lung cancer started surfacing in the medical literature as early as the 1920s. Even though people generally knew cigarettes were bad for you, it wasn’t enough, and smoking in America surged dramatically during the first half of the 20th century.

So what was the solution? In 1964, the first Surgeon General’s Report on Smoking and Health linked smoking to lung cancer and heart disease. This landmark report laid the foundation for the next 50 years of public education about the negative effects of smoking, and the results have been dramatic:

US Cigarette Consumption

The U.S. government started running extremely effective public service campaigns over the following decades about the number of years cigarettes shaved off your life, the specific diseases you would contract and how likely you’d be to get them, and the effects on loved ones who are exposed to your second hand smoke. In order to help people to do something difficult but valuable, such as quitting an addictive habit, a critical first step is to help them understand the cost of not doing that thing.