For larger companies, high turnover could cost millions of dollars. However, true turnover costs are more complex than simply figuring out the average cost of replacement. There is voluntary and involuntary turnover. Within voluntary turnover, there is both wanted and unwanted turnover. There are some employees we are glad to see go even if there are replacement costs.
Unwanted turnover represents costs that are greater than simple replacement costs.
The costs of losing a good performer are greater than the costs of losing an average performer. The true cost of losing a key seasoned player is hard to estimate. There is the investment in development of the employee, the value of the knowledge and experience gained, and the lost productivity that also have to be considered to arrive at a true cost figure. When an organization starts to lose significant numbers of senior employees, it is usually indicative of even more serious organizational problems. In this model, the overall economy sets the stage for alternative employment opportunities.