Replacing one employee costs 50% to 200% of their annual salary.
For a 50-person team running 15% turnover, that is often half a million dollars a year, lost to recruiter fees, vacancy gaps, ramp time, and knowledge that walks out the door. Run your numbers below.
by role
Cost per departure
by team size
Annual turnover bill
by salary band
Saving from 1% drop
Cohort retention curve
Months 0 to 12
Month 3
82%
Month 6
71%
Month 12
58%
Sample cohort: 100 mid-market hires. Each percentage point you hold in month 12 represents recovered cost equal to roughly one full replacement.
Step 01 / inputs
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Multiplier reference
Step 02 / output ledger
awaiting input
Annual turnover P&L
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cohort.console / waiting
Methodology breakdown
What makes up the cost of one departure
Recruitment
20-30%Job board postings, recruiter fees (typically 15 to 25% of salary for external hires), interview time from hiring managers, and HR administrative time.
Lost productivity
35-50%Departing employee output drops in their final weeks. Role sits vacant. The replacement operates at reduced capacity for 3 to 6 months during ramp.
Onboarding & training
15-20%Formal training programmes, buddy or mentor time, access provisioning, equipment setup, and the soft overhead of colleagues fielding questions during the curve.
Knowledge loss
10-15%Tribal knowledge, customer relationships, institutional context, and undocumented processes that leave with the employee. Worst for senior roles.
Team disruption
5-10%Reduced morale, increased workload on remaining team members, possible contagion if departure signals dissatisfaction, and manager time stabilising.
Severance & admin
3-5%Exit interviews, final payroll, benefits continuation, legal review if required, offboarding checklists, and equipment recovery.
Source data
Headline benchmarks
$1T+
Annual cost to US businesses
Gallup
6-9 mo
Salary equivalent per replacement
SHRM
13.9%
US voluntary turnover rate
BLS 2025
57%
of turnover happens in year one
Work Institute
Section index
Where to go next
01
Cost by role
Engineer, sales, exec, support. Eight role profiles with full line-item breakdowns.
02
Cost by industry
Twelve industries with turnover rates, top quartile, and dollar impact.
03
The hidden 60%
Productivity drag, contagion, knowledge loss. The cost categories most teams miss.
04
Strategies that work
Ten evidence-based retention plays ranked by ROI and cost.
05
Retention vs recruit
When to invest in keeping people. When to accept the departure.
06
Build the case
Five-slide template for taking retention budget to leadership.
Common questions
Frequently asked
How much does it cost to replace an employee?
Replacing an employee costs between 50% and 200% of their annual salary depending on the role. SHRM estimates average replacement cost at 6 to 9 months of salary for mid-level roles. For software engineers, the total cost often exceeds 1.5x annual salary when including recruitment fees, lost productivity during the ramp period, and knowledge transfer time.
What is a healthy employee turnover rate?
Average US turnover across all industries is 15 to 20% per year. Technology companies typically run 13 to 18%, retail and hospitality run 30 to 60%. A healthy target for most businesses is under 10% annual turnover. Turnover above 20% in professional services or technology roles generally indicates a retention problem worth addressing.
Why is engineer turnover so expensive?
Software engineers have high replacement costs for several reasons: long hiring timelines (3 to 4 months), above-market recruiter fees, a 3 to 6 month ramp-up period before full productivity, significant loss of codebase and system knowledge, disruption to ongoing projects, and the fact that departures sometimes trigger additional departures from team members who followed the individual.
What is the ROI of improving retention by 1%?
For a 100-person engineering team with average $130,000 salaries running 15% annual turnover, reducing turnover from 15% to 14% saves approximately $195,000 per year. This means a single percentage point improvement often pays for an entire retention programme. The calculator on this page shows your specific savings based on your team details.
What are the most effective employee retention strategies?
The strategies with the highest documented ROI include: competitive total compensation reviewed annually, clear career progression paths, manager quality improvement (the most common reason for resignation is a direct manager), flexible working arrangements, meaningful work and autonomy, and recognition programmes. Exit interview analysis is essential for identifying which factors are actually driving your specific turnover.
How does turnover affect team productivity?
Turnover reduces team productivity in multiple ways: the departing employee's output drops in their final weeks, the role is vacant for weeks or months, remaining team members absorb extra work, the new hire operates at 25 to 50% capacity for 3 to 6 months, and manager bandwidth is consumed by hiring and onboarding. High-turnover teams consistently underperform stable teams by measurable margins on output metrics.