Turnover Impact on Profitability

HR: Employees are leaving jobs. CFO: Do we have data on why they’re leaving? HR: Yes. 70% of our turnover is tied to unmet needs like growth, recognition, and flexibility. CEO: But how much does it actually cost us when they leave? HR: Each lost employee costs 1.5x their salary to replace, not to mention the productivity gap. CEO: We need to reduce spending. We can't spend on engagement programs. CFO: What’s the impact of these engagement programs on retention? HR: Programs focused on growth and recognition have reduced turnover by 25%, saving us $3M annually. CEO: Are there other benefits to meeting employee needs? HR: Absolutely. Employees who feel valued are 30% more productive and report higher satisfaction. CFO: What about profitability? CHRO: Engaged teams generate 21% higher profitability. It’s not just about keeping them. It’s about keeping them productive and motivated. CEO: So cutting back on programs that meet employee needs could cost us more? CFO: The data shows there’s a significant financial impact. HR: Meeting employee needs isn’t just an expense. It’s an investment in retention, productivity, and profit. The lesson? Employees quit when their needs go unmet, whether it’s for growth, recognition, or flexibility. Invest in your employees.

💡 "Craig, as you predicted, we lost the candidate over $5K. I can't get my leadership to understand how that $5K decision is a $200K LOSS for the organization." Ok, let’s do the math & show them together! 🛠️ Scenario: A 4-year Software Engineer resigns, making $100K/year. The team is now down a critical member during a key sprint — workload is redistributed. Job is posted at $80K-$110K, and after weeks of sourcing and interviewing, the ideal candidate is identified. The candidate currently makes $105K, but leadership decides to offer $100K — a $5K shortfall. 📉 What’s the REAL cost of that $5K lowball? - Extended Vacancy Costs: - Every month the role remains open, the rest of the team is stretched thin, impacting productivity. - If that engineer was generating or supporting projects worth $300K/year, each month the role is vacant costs $25K in lost revenue. - If the search drags on for 2 months, that’s already $50K in lost productivity/revenue. Team Burnout & Turnover: The existing team has been covering the gap, leading to increased stress and potential burnout. If another engineer who’s been picking up the slack decides to leave due to overwork, the replacement cost can be as high as 50%-200% of their salary. Let’s say that engineer is also making $100K and decides to leave — recruiting, training, and ramp-up costs can easily hit $100K-$200K. Reopened Search: Restarting the search means additional recruiting costs — more job ads, recruiter fees, and interview time. If the average cost per hire is $15K, and we’re now on our second attempt, that’s another $15K lost. 🔍 Total Loss Calculation: Extended Vacancy: $50K Burnout/Turnover: $100K-$200K Reopened Search: $15K Total Potential Loss: $165K-$265K. So, leadership’s decision to lowball by $5K has now cost the organization at least $200K in lost revenue, productivity, and increased hiring costs. 💡 Bottom Line: If leadership truly understood how much that $5K “savings” is actually costing the business, they’d be falling over themselves to offer $110K. #Hiring #Retention #Leadership #CostOfTurnover #Recruiting #TalentAcquisition #Compensation #EmployeeEngagement #LinkedInTips #innovation #technology

Costco's turnover rate is 6% for employees with over 1 year of service. The industry average? 60%. They didn't achieve this with ping pong tables or unlimited PTO... They did it by understanding a fundamental truth that most companies miss: Leadership isn't about managing roles, it's about investing in people. Here's what Costco figured out that others haven't. While competitors race to minimize labor costs, Costco pays cashiers $20–$22/hr on average. Target pays $17. Walmart pays $18. But here's where it gets interesting: Costco's labor costs as a percentage of sales are actually lower than both competitors. How? Because replacing an employee costs 150% of their annual salary. When you're turning over 60% of your workforce yearly like most retailers, those costs destroy your margins. Costco's 6% turnover means they're not bleeding money on constant hiring, training, and lost productivity. But the real differentiator isn't the wages. It's their promote-from-within obsession. 70% of Costco's warehouse managers started as hourly employees. The CEO? Started collecting carts in the parking lot. When people see a real path forward, not corporate fairy tales, they stay. They invest. They care. This creates something salary surveys can't measure. Employees who've grown with the company understand every role because they've done them. They make better decisions because they know how those decisions impact the front lines. They lead with empathy because they remember being there. The lesson for every leader: Stop asking "How little can we pay?" Start asking "What return do we get from investing in our people?" Stop managing roles. Start leading humans. Stop importing talent. Start developing it. When you shift from seeing people as costs to seeing them as investments, everything changes. Retention improves. Performance accelerates. Culture strengthens. Your spreadsheet might not capture it immediately. But your competition will feel it when they can't keep up. Want more research-backed leadership insights like this? Join 11,000+ execs in our weekly newsletter: 👉 https://lnkd.in/en9vxeNk

The day HR stopped being just an expense center... The CFO stared at the hiring dashboard. “Why,” she asked, voice tight, “do we have 53 open positions when our recruiting budget is already maxed out?” Once upon a time, HR would have shuffled papers, blamed job boards, and asked for more budget. “Let me check our spreadsheets,” they’d say. “We’ve spent $210K on postings and agencies.” “Exit interviews show it’s about pay. I’ll pull the files.” “It’ll take a week.” And so it went. More interviews. More job boards. More money out the door. Turnover still climbing. But this time, the Chief People Officer didn’t reach for the spreadsheets. This time, she reached for the story behind the numbers. “Our talent analytics team flagged that we’re paying 19% below market in key roles,” she began. “We’ve modeled a $1.9 million investment in targeted compensation adjustments projected to save $3.1 million in turnover costs over the next twelve months.” The CFO looked up, surprised. “And the 32% sales turnover?” “We dug deeper,” the CPO continued. “The top performers who stayed had twice as much structured coaching time and 50% more client exposure. We’ve restructured onboarding and territories, and early data shows a 35% increase in new hire productivity.” The CFO leaned back, her expression softening into curiosity. “How does this affect the bottom line?” “For every 1% drop in turnover, we save about $180,000,” she explained. “Our retention initiatives will cost $650,000 but are projected to save $1.8 million annually. Plus, our new talent pipeline cut time-to-hire from 76 days to 29, unlocking $3.5 million in recovered revenue opportunity.” The CFO sat in silence for a moment. It was the first time HR had come to the table not with problems, but with solutions, backed by data, framed in dollars, and connected to growth. In that conversation, something changed. HR stopped being the department that processes paperwork. And started being the partner that drives profit. The moral? If you want to build a healthy business, you need a different kind of conversation. One where HR doesn’t just ask for budget... they show how investments in people fuel the balance sheet. One where finance doesn’t just question cost... they help model the upside of a thriving workforce. One where the CPO and CFO sit on the same side of the table... and measure success not just in headcount, but in value created. Because when People and Finance work as true partners, you don’t just fill seats. You build a place where talent sticks around, grows stronger, and powers the next wave of growth. The bottom line? If HR isn’t measuring impact in dollars, it’s just an expense center. But when it is - it becomes the engine of the business.

Why store performance is suffering — and where the turnaround starts. Retail leaders are under pressure. Store performance is under pressure. Margins are tight. Traffic is inconsistent. But in many cases, the real issue isn’t demand — it’s each retail brand’s ability to attract, retain, train, and support the store fleet. -Too many open roles -Turnover remains high  -Quality and Focus of Training  -Compensation that hasn’t kept pace with responsibilities, and offers limited incentive to retain and grow talent -A workload that has expanded while coverage stays lean And the demands on store teams haven’t slowed. Teams are expected to handle fulfillment, service, online returns, visual recovery, training, and selling — often with less help than ever before. The CX suffers in this scenario. The result: -Inconsistent execution -Missed conversion opportunities -Declining morale -Overstretched managers -Frustrated customers -Loyalty takes a hit I have yet to find a Scheduling Program that can solve this if the shifts go unfilled or if the team lacks the tools and support to succeed. Optimization doesn’t drive results without capability. This is a frontline issue with bottom-line consequences. According to Gallup, organizations with high employee engagement see: -21% higher profitability -18% higher productivity -59% less turnover in high-turnover industries like retail (Source: Gallup, State of the Global Workplace, 2023) SHRM estimates the average cost to replace an hourly retail employee at $3,500 to $10,000, factoring in training, lost productivity, and business disruption. (Source: Society for Human Resource Management) But the real cost shows up in store inconsistency, lost customer trust, and disengaged teams. Some retailers are addressing these realities head-on. Examples include: -Segmenting stores and staffing based on operational complexity -Blending roles to increase flexibility without sacrificing focus -Prioritizing coaching — not just onboarding -Creating structure for store leaders to lead, not chase tasks -Building continuous feedback loops -Reassessing compensation and engagement as active levers, not static policies Because retention isn’t about perks — it’s about creating an environment where people are engaged, respected, equipped, and positioned to succeed. The store is still where the brand comes to life. But it can only deliver when the team can. From my vantage point, this is not a one-department issue. It sits at the intersection of field leadership, HR, finance, operations, and communication, and solving it requires alignment across those functions. Each retail brand will decide how to respond. For those already taking action: What’s one step that’s making a difference in your store teams’ capability or engagement? Consistent Execution? Always interested in hearing what’s working in the field. Kevin Finnegan kfinnegan@grnlowcountry.com www.grnlowcountry.com

CEOs can greatly increase their profit & revenue by Q3, doing this one thing… Hire right. Salespeople have nearly a 3x rate of turnover compared to non-revenue generating roles. 33% of sales people quit or are let go within 18 months of hire. I spoke with one staffing agency recently that had 100% sales team churn over the past two years. So what does it actually cost when you don’t hire right? Hold your nose because this is going to stink! Recruitment Costs • Advertising fees for job site postings • Resources for interviewing and assessments • Background checks and screenings • Recruiting firm commissions ($15-25%) Onboarding Costs • Training materials, classes, and mentors • Technology (CRM, Phone, Laptop, Software) • Leader bandwidth to train and onboard Lost Productivity Costs • Client handover disruption • Ramp up time to build book of business • Knowledge gap for industry, product/service, and company Opportunity Costs • Team Disruption and uncertainty • Erodes employee engagement & productivity • Reputation drops making it harder to attract quality talent    Exit Costs for the departing rep • Severance Pay or continuation of benefits • Payout of Unused PTO • Potential non-compete enforcement Buckle up. The estimated direct and indirect costs to replace a $100K (salary+ commissioned) sales rep is $150,000! That is an insurmountable financial hit for any company. This is not an employee problem.  It’s a simply a hiring problem! Most sales organizations do not have a formal SALES SPECIFIC assessment to screen candidates. Here’s how they, and maybe you, hire: Gut feeling. You know the type: “I’ve been doing this for a long time and can spot a winner a mile away”. These hiring managers, maybe even you, say things like: “He presented himself really well, sharp guy!” “Solid resume and background. I think she can be a good fit” “Seems like a real go getter. Overcame challenges in her life...I like her.” “ Former D1 college athlete…he’s going to be competitive and coachable.”  Familiararity. Favoring candidates that share familiar traits is called affinity or similarity bias. These hiring managers say things like this: “An FSU Alumni! How can we not hire her!” “I like that he worked at my former company, we’ve had good hires from there.” “Played first base in the minor leagues & had a sports injury like me. I like his drive. The fix? 1) Get your Job Descriptions right. 2) Use Sales Specific candidate assessment testing. 3) Implement an interviewing process that removes gut feelings and bias. When you hire right, you can reduce attrition from 33% to 9%! Headcount is an organization's highest investment. Don't spend good money on bad hires! ______________________________________________________________ I'm Seth Prezant, an Executive Sales Coach, Leadership Developer, and Sales Team Trainer. Talk to me about sales team evaluations and sales candidate screenings for your company.

The True Cost of Turnover: How HR Can Shift C-Suite Thinking Turnover is far more expensive than most leaders realize—and HR must make this clear. Leaders act when they see data-driven evidence of the cost of current practices and the value of investing in people. Here’s how HR can lead the charge: Present Turnover as a Financial Crisis. Most executives underestimate the true cost of turnover, often citing figures like $4,000 per employee. The reality? Replacing a single employee can cost a multiple of their salary due to lost productivity, training expenses, and team disruption. Accurate metrics change the conversation. Use Dashboards That Connect People Data to Business Outcomes. Provide leaders with metrics on turnover costs, employee well-being, and internal promotions. Include absenteeism, use of employee assistance programs, and engagement levels. When HR connects these data points to financial performance, it paints a compelling picture. Demand Vendor Accountability for Usable Data. Many HR leaders can’t analyze hiring and retention effectively because vendors hoard their data. Insist on receiving usable, compatible datasets—or require vendors to deliver actionable insights. This transparency empowers better decision-making. Showcase Real-World Success Stories. Companies like Walmart and Neiman Marcus have transformed operations by addressing turnover with data. Walmart redesigned roles and schedules, while Neiman Marcus improved benefits and stopped outsourcing recruitment, all driven by HR’s insights. Counter Reactive Layoff Strategies with Evidence. Layoffs and unfilled vacancies often harm financial performance. Research shows longer vacancies lower returns on assets by 5-6% quarterly. Sharing these insights positions HR as a strategic advisor rather than a compliance function. HR can redefine how the C-suite views human capital by showing the hidden costs of inaction and the gains from prioritizing people. Learn more at https://buff.ly/3BQIiLm

Losing a top performer doesn’t just leave a gap. It leaves a ripple. And most companies underestimate what it really costs. Let’s break it down: 1. Financial cost: 2.5x their salary ↳ Recruiting, onboarding, productivity loss add up—fast ↳ But that’s just the beginning 2. Lost knowledge ↳ Top performers hold more than job descriptions ↳ They hold relationships, context, and insight (𝘉𝘢𝘥 𝘯𝘦𝘸𝘴: 𝘺𝘰𝘶 𝘤𝘢𝘯’𝘵 𝘳𝘦𝘱𝘭𝘢𝘤𝘦 𝘪𝘵 𝘪𝘯 𝘢 𝘩𝘢𝘯𝘥𝘰𝘷𝘦𝘳 𝘥𝘰𝘤) 3. Morale drop ↳ When a high performer leaves, it sends a message ↳ People wonder: “Why do they leave? Should I go too?” 4. Burnout for those who stay ↳ Someone has to pick up the slack ↳ And it’s usually your other top people (𝘖𝘷𝘦𝘳 𝘵𝘪𝘮𝘦, 𝘵𝘩𝘪𝘴 𝘤𝘳𝘦𝘢𝘵𝘦𝘴 𝘥𝘰𝘶𝘣𝘭𝘦 𝘢𝘵𝘵𝘳𝘪𝘵𝘪𝘰𝘯, 𝘵𝘳𝘶𝘴𝘵 𝘮𝘦) 5. Client confidence dips ↳ When a well-known employee exits, clients feel it too ↳ Service, relationships, and trust all take a hit 6. Momentum slows ↳ Every departure causes delays, projects stall, doubts ↳ The team moves from thriving → surviving 7. Culture weakens ↳ If departures become common... ↳ A “what’s the point?” mindset creeps in (𝘙𝘦𝘣𝘶𝘪𝘭𝘥𝘪𝘯𝘨 𝘤𝘶𝘭𝘵𝘶𝘳𝘦 𝘪𝘴 𝘩𝘢𝘳𝘥𝘦𝘳 𝘵𝘩𝘢𝘯 𝘳𝘦𝘣𝘶𝘪𝘭𝘥𝘪𝘯𝘨 𝘩𝘦𝘢𝘥𝘤𝘰𝘶𝘯𝘵) So... The real cost of losing great talent? It’s not just the hire. It’s: → Lost energy → Lost loyalty → Lost time → Lost belief → Lost self-confidence Retention isn’t HR’s job. It’s a leadership responsibility. ♻️ Share it for those who think turnover is “just business” And follow Andrea Petrone for more.

Leaders who grasp the true cost of turnover recognize that the direct expenses of recruiting and training new staff are just the tip of the iceberg. Beyond these are the hidden costs: the loss of institutional knowledge, the impact on team morale, the disruption to customer relationships, and the potential decline in product or service quality until new hires reach a comparable level of proficiency. By prioritizing retention and fair payment, leaders can create a stronger, more competitive, and more resilient organization. Gary Travis #garytravis #careers #culture #leadership #leadershipdevelopment

Alright, folks, let's talk about something that's been grinding my gears, as well as too many business owners and managers in every industry for decades: Salesperson Turnover. First off, this isn't just a sales problem—it's a professional crisis. When we see high turnover, we're not just losing team members; we're watching client churn rates skyrocket, profit margins get squeezed, and costs balloon. Here’s the breakdown: Client Churn: When your sales team is constantly changing, clients feel like they're dealing with strangers. Trust erodes, and they jump ship. Profit Margin Compression: New salespeople often don't know your products or services inside out, leading to lower value sales and less strategic selling, which hits your bottom line hard. Added Expenses: Replacing salespeople isn't cheap. There's the cost of recruitment, training, and the lost sales during onboarding. Plus, you ramp up marketing to compensate for the loss in sales momentum. But here's the kicker - this isn't about the salespeople... It's about leadership and culture. We've got to stop this cycle of hiring and firing by focusing on what really matters: Quality Training and Development: Instead of pumping out salespeople who use aggressive, short-term tactics, invest in training that teaches long-term relationship building, consultative selling, and true value delivery. The typical "get rich quick" sales training is a cancer to sustainable business growth. It makes everyone feel like shit, including your clients, who might buy once but won't stick around. Cultural Investment: A positive, supportive culture where salespeople feel valued and are given the tools to succeed reduces turnover. It’s about creating an environment where salespeople want to stay, grow, and thrive. Leaders, ask yourselves: Are we setting up our sales teams for long-term success or just short-term gains? If it's the latter, you're not just burning through salespeople; you're burning through your business's future. It's high time to flip the script. Invest in your people, invest in your culture, and watch as your profitability explodes, salesperson turnover disappears and client retention and referral opportunities shoot through the roof! What's your take on this? Are you seeing similar challenges or have you cracked the code? LEAVE A COMMENT BELOW OR TAG A COLLEAGUE OR BUSINESS OWNER WHO CAN BENEFIT FROM OR CONTRIBUTE TO THIS TOPIC THREAD! . . . #business #sales #salespeople #sellingskills #culture #leadership #ACADEMY365 #7PILLARS