The hidden costs of employee turnover

What happens when your top sales manager walks out the door at the end of a tough quarter?

It’s not just one resignation. It’s lost deals, slipping timelines, pressure piling on the rest of the team, and months of disruption while you scramble to find and train a replacement. By the time the new person is up to speed, the opportunity cost has already ballooned.

Here’s the part that is often overlooked: the true cost isn’t in the talent attraction or recruitment process. It’s in the ripple effects. Productivity drops. Morale sinks. Company knowledge walks out the door. The best people left behind start asking themselves whether they should follow.

This is the hidden reality of employee turnover. For a UK organisation with over a thousand employees, where staff costs are among the most significant expenditure, the financial impact is staggering. It’s tempting to see employee churn as part of doing business, but the numbers suggest otherwise. Oxford Economics estimates that replacing an employee earning over £25,000 costs more than £30,000 when you factor in recruitment, onboarding, and lost productivity - a figure that rises steeply with seniority or technical and specialist skill sets. While HRZone highlights that UK businesses collectively lose over £4 billion each year to employee turnover, largely because new employees can take up to eight months to reach full productivity.

Think about what that means in practice. The average employee turnover in the UK ranges from 15% to 35%. Consequently, a company of 1,000 people with an annual employee turnover at the lower end of the scale of 15% is replacing up to 150 employees annually. Multiply that by £30,000 each, and you’re looking at a price tag in the millions. That’s before considering the harder-to-measure effects: the pressure on remaining staff, the cultural impact of seeing colleagues walk out, and the reputational damage that can make it harder to attract new talent.

So what’s the answer?

Cutting the Hidden Costs by Removing Barriers

Most of these costs are hidden, but at the same time, most of them are preventable. Retention is not just about higher pay or fancier perks. People don’t stay because you have a ping-pong table or a shiny benefits package. They stay because they feel valued, can see a future for themselves, and believe they belong and can make a difference.

When organisations take the time to really understand the people landscape, patterns emerge, and it becomes clear that employee turnover is driven by invisible hurdles (barriers to inclusion). When you can spot those patterns, you can begin to fix them. Inclusion strategies do just that: they enable you to identify and remove those barriers before they do more damage.

What does this look like in practice? It means examining your policies, processes and procedures. It means slicing, dicing and analysing hiring, promotion and pay data. It means understanding bias and where it features within the employee lifecycle. And it means ensuring employee experiences are listened to and understood. Then, finally, it means combining all of this information into one pot and finding the root cause. Only when people believe they are truly seen, given fair progression paths, and rewarded for their contributions does employee turnover (and the associated costs) begin to drop.

This is why inclusion isn’t a side project, it’s a retention strategy. Retention and inclusion are two sides of the same coin. When employees feel like they belong, employee turnover slows, teams stabilise, and productivity grows. Instead of pouring millions into replacing people, organisations can channel that investment into growth, innovation, and culture.

The story of employee turnover is much more than a line item in the HR budget. It’s the story of lost opportunities, disrupted teams, and weakened trust. But it can also be a story of transformation. By embedding inclusion at the heart of the employee experience, organisations can turn a hidden liability into a competitive advantage and secure not just their people, but their future.