Cost of Leaving Crisis

Employee Turnover across Australia

Employee turnover has been very high across most sectors in Australia since 2021. This has been fanned by a super storm of reasons from Covid to Cost of Living. Some turnover is better than stagnation but too much turnover is disruptive to business and extremely costly. The costs of employee turnover are hard to measure but taking a deeper dive, the financial impact is higher than you might think.

When researching this subject, you can find articles that will quote the cost of replacing an employee anywhere from 25% to over 200% of the employee salary. Spoiler alert, the lower number is far more likely as the higher indicator comes from sources claiming that a CEO’s resignation can cost a business up to 216% of their annual salary, but I’m not sure I believe that this is anything other than a real outlier.

While the Australian unemployment rate remains low and vacancy rates remain high turnover will continue to be a factor for many organisations. (Australian Bureau of Statistics (July 2023), Labour Force, Australia, ABS Website, accessed 18 August 2023).

Financial Cost

There is the financial cost as detailed below, but there is also a lot of other less quantifiable costs associated with employee turnover. Many of these are costs that can’t really be measured in financial terms. These include the cost of potential damage to morale of the existing team (friends leaving and workload up), the cost of competitors hiring your high performers and any subsequent competitive advantage they may achieve and the all-important cost of losing intellectual property and company know how.

If you add all these to the below data table, taking from that what you like for your people, it becomes clear that turnover is an expensive business.

What is the solution?

There are of course many factors that will influence turnover in your business, some easy to address, others less so. When looking to minimise turnover making sure people are appropriately
remunerated, engaged and motivated is a good start. To learn more about Lawson Delaney’s expertise in retention strategies, remuneration benchmarking and other consulting services, please get in touch with David May, Director, on 0493 660 013 or david@lawsondelaney.com.au

Lawson Delaney is a leading executive search and professional recruitment firm based in Melbourne. We specialise in recruiting CEOs and leadership teams, and accountants of all seniorities for Accounting firms. Contact us on 03 9946 7300 or support@lawsondelaney.com.au to learn more about how we can assist you with a vacancy or new role today.