Direct costs include things like help-wanted advertising, interviewing, and overtime for employees who take on the departing workers' tasks. Sibson includes several problems in this group, such as lost customer relationships due to poor service from partially trained replacement employees, or valuable client lists that leave with employees. Productivity suffers as the new hires tackle learning curves. Indirect costs include things you can't easily quantify, but clearly have negative impacts on organizational productivity and know-how. Burchman mentions lower growth rates, loss of organizational knowledge, and reduced staff size and effectiveness.
Management is hobbled, too.
An example in the Sibson study makes the industry numbers all the more tangible. Paying attention to retention When turnover hits hard, a hiring manager's focus should turn to retaining the employees already onboard. But first managers need to understand why people leave their company, and they should be careful not to extrapolate from industry norms, Kochanski advises. In a March 1999 fax survey by the AMA, however, people identified miscommunication as the main reason they left their companies. But Greenberg says an AMA study of employees found skills-enhancement programs to be best for reducing turnover.