From advertising, employer branding and referral programs to recruiting software and talent agencies, a majority of American employers intend to increase their investment in talent sourcing this year. And yet, most experts agree it is far less expensive to increase an employee’s level of job satisfaction — and by extension, retention rates — than it would be to recruit and train a new employee or replacement.

The question of how to bring more balance to the focus on recruiting versus retention is thornier than it appears at first glance: While a recent study by Kronos and Future Workplace found that a full 87% of human resource leaders acknowledge employee retention will be a priority in the next five years, 20% of respondents said they are too overwhelmed by other priorities to address the issue in 2017. Another 14% cited lack of executive support as a primary obstacle.  

Could there be a more forward-thinking, budget-conscious approach to the creation and cultivation of a skilled, capable and loyal workforce? 

Quantifying Employee Value

Estimates on the cost associated with losing and/or replacing an employee range widely.

Deloitte’s Josh Bersin, for example, believes the expense could fall anywhere between “tens of thousands of dollars” and up to twice the lost employee’s annual salary, basing his calculation on a variety of factors including:

  • The cost of hiring a replacement, including advertising, interviewing, screening and hiring
  • The cost of onboarding and training a new employee
  • Lost productivity, as the new hire can take a significant amount of time to reach desired productivity levels
  • Lost engagement and morale amongst remaining employees  
  • Customer service errors that result from turnover

Other researchers, however, are convinced the price tag could be considerably higher. Indeed, a recent meta-analysis of studies in the field conducted by the Center for American Progress suggested the cost of a lost employee in a skilled position is equivalent to more than two hundred percent of their annual salary.

The Compounding Value of Staff

As useful and necessary as the data could suggest, many of these calculations struggle to take into proper account the intangible values of an existing staff member. 

Over time, the value that an employee brings to the company compounds significantly, making it difficult to compare the cost of an employee who exits after two years to one who leaves after 10 — even if they held the same title. 


Longer-term employees both develop soft skills that contribute to the culture of a workplace and gain a deeper understanding of how the organization works, allowing them to more readily identify and address challenges within the company ecosystem. Such employees may also be responsible for maintaining key relationships for the organization that stand to suffer when they leave.

Karlyn Borysenko, owner and principal of the HR consultancy Zen Workplace, pegs the cost of losing an entry-level employee at between 30% and 50% of their annual salary. That estimate jumps significantly (to upwards of 150% of the staff member’s annual salary) when it comes to mid-level employees. For high-level employees or those with highly specialized skills, the employer stands to suffer financial losses equivalent to an astronomical 400% of that employee’s annual salary if they leave.

How Companies Can Mitigate This Issue

Here’s the good news: Small investments in employee satisfaction and retention have the potential to provide significant returns — even when the largest share of the American workforce hails from a generation infamous for frequent job-hopping.

Yes, a 2016 Gallup survey found that 21% of millennial respondents had changed jobs within the past year — a figure three times higher than the rest of the adult population and one Gallup estimates costs the U.S. economy $30.5 billion annually.

At the same time, a recent LinkedIn survey of more than 13,000 millennials that sought to understand what lures the younger generation towards new opportunities, suggested the turnover issue is hardly an intractable one — millennials are most attracted to a prospective employer by its culture, values and workplace perks and benefits.

So with the retention “lock” for younger employees located, companies must simply go about the business of fashioning a “key” that fits it. 

The Best ROI Bang for Your Progressive Benefit Buck

While progressive benefits come in many different shapes and sizes, one of today’s hottest new employee perks is also one with a significant return on investment. Recent research has found that employees struggling with student debt are more attracted to companies that can provide repayment assistance, yet only 4% of American employers currently offer the perk, making it a truly differentiating factor for employers that do.

According to a new Oliver Wyman survey, among working professionals with student debt:

– 80% consider their debt to be a significant source of stress

– 58% would rather have student loan repayment assistance than a mutual fund contribution 

– 45% selected student loan repayment as the most compelling employee benefit compared with other options like health care and retirement contributions

– 90% indicate that student loan repayment assistance would positively impact their decision to accept a job. 

At the same time, research from Gradifi has found that providing student loan repayment as an employee benefit provides employers with a 5x return on investment in just one year, and that the average employee tenure needs to only be extended by two months for the benefit to pay for itself. 

In a highly competitive talent marketplace, a thoughtfully constructed progressive benefits package can not only help you avoid the expense — both tangible and intangible — of employee turnover, but also play a part in attracting the best and the brightest potential hires to your enterprise.