Why does it cost so much to replace a departing employee? Some costs, like paying off accrued vacation time or the cost of a help-wanted ad, are obvious.
Other costs include:
Increased unemployment insurance costs
Lost productivity while there is a vacancy
Time costs for the separation (Exit) interview (If your good employees are leaving, you NEED to know why)
Separation agreement costs (legal, financial, medical, retirement cash-out, etc.)
Overtime from other employees to handle the vacancy (which can lead to burn-out or absenteeism)
Time costs to review resumes
Time costs to interview candidates
Interview expenses for the candidates
Possible travel expenses
Possible relocation expenses
Head-hunter or signing bonus fees
Additional bookkeeping; payroll, 401k, etc.
Additional record keeping for government agencies
Reduced productivity while the new worker gets up to speed
Training programs
Corporate history lost
Morale can be affected
Intellectual property lost
There are also risks associated with loosing an employee.
Threat of lawsuit
Bad PR from disgruntled employee
Threat that the employee will take clients to a new firm
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