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Employer Resource Center


What Are the Costs of Employee Turnover?

Can you as an employer account for long-term costs?

The AARP study, "The Business Case for Workers Age 50+: Planning for Tomorrow's Talent Needs in Today's Competitive Environment" by Towers Perrin (now known as Towers Watson), examined the recruitment and retention of older workers from a business case perspective. The report found that replacing an experienced worker at any age can cost 50 percent or more of the individual's annual salary in turnover-related costs, with increased costs for jobs requiring specialized skills, advanced training or extensive experience, which are qualifications often possessed by 50-plus workers.

See also: AARP Best Employers for Workers Over 50

The turnover costs are even more staggering among higher-skilled workers; for example, to replace an acute care nurse, it may cost two to three times the salary of the lost nurse, according to the AARP report, "Focus on Health Care: Recruiting and Retaining Workers 50 +" .

Here is a list of the potential indirect costs of employee turnover:

  • Lost productivity associated with the interim period before a replacement can fill the job, the time a co-worker spends away from his or her work to help fill the gap and low employee morale.
  • The cost of formal and informal training to get the new employee up to speed.
  • Severance pay or litigation costs from involuntary turnovers.
  • Costs for advertising and promotional materials, referral bonuses, relocation expenses and background checks.

While job turnover is normal and unavoidable in the course of conducting business today, employers should ask questions such as:

  • What are the costs of work not being done or completed?
  • How is morale and productivity affected?
  • How can you stay competitive with the loss of experienced and highly skilled workers?

Because of the expense and impact on the bottom line, employers should carefully consider all costs associated with employee turnover and develop a retention strategy for current and future talent management needs — in particular, to help the company stay competitive with the potential loss of experienced employees.

Employers may also want to take a look at organizations that have been identified as having policies and practices that are of value to the older worker via AARP’s Life Reimagined for Work initiative as well as the AARP Best Employers for Workers Over 50 program.

An AARP Resource

AARP Workforce Assessment Tool

This online tool is simple to use and provides you with a workforce profile that will help you make critical talent management decisions, especially in key functional areas, and additional information that will help you recruit and retain your workforce:

  • Recruiting Forecasting
  • Talent Sourcing and Recruitment
  • Succession Planning
  • Employee Learning and Development
  • Mentoring and Coaching

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Future of Work@50+

An Initiative of the AARP Public Policy Institute