Lose People, Lose Money
The AICPA’s Mark Koziel and Heidi Brundage figure it this way:
Even using conservative assumptions, a firm could easily spend $32,500 to replace a team member. Some assumptions used in this example are for a midsize firm with $1 million annual profits and an average salary of $60,000. Our assumptions provide a low turnover cost compared with some firm estimates. Yet you can still see, given the 20% to 25% annual turnover rate many firms experience, how reducing annual turnover to 5% to 10% could boost profits.
In the last year some firms have been through staff reductions that kept turnover in the 20% to 25% range they were accustomed to. While there may have been a short-term savings in payroll, you can see that the long-term costs of turnover directly affect profits.
**Turnover costs are based on a one-year operating assumption.
Note: The assumptions and cost per employee are based on simplistic calculations for illustrative purposes only.