Turnover is expensive. Whether it’s an executive-level position or a minimum-wage position, the cost adds up for UK businesses.
The true cost of turnover is hard to pinpoint. However, in 2014, a joint study by Oxford Economics & Unum reported that the average cost of replacing an employee in the United Kingdom was over £30,000.
This data covered two key aspects. First, there was the direct cost, which was spent during the recruitment process and the training & onboarding. Here, the fees paid for job ads, agency fees, and the time spent searching and interviewing can add up, particularly if a search lasts a long time. This accounted for £5,433, although this cost has likely risen since the study was conducted due to inflation and because of increases in the UK’s minimum wage laws.
Secondly was the indirect cost, which highlights a productivity dip, followed by the period of time before the new hire is up to optimal productivity, which was estimated to cost the company £25,181. The question is, where does this cost come from?
Key Takeaways
- Employee turnover represents a significant financial burden for UK businesses, with replacement costs historically exceeding £30,000 per employee.
- Direct recruitment and onboarding expenses are only part of the impact; lost productivity and knowledge account for the majority of turnover-related costs.
- Departing employees create periods of negative productivity, strain remaining staff, and disrupt team momentum and morale.
The Unseen Costs
These costs are more accurately framed as a loss rather than a paid cost. When an employee leaves, productivity doesn’t just drop; it becomes negative.
When an employee leaves, the remaining staff are tasked with picking up the slack and must divert their energy among more work.
The staff member who left also takes knowledge and expertise of the current project, slowing team progress as they learn to fill in new gaps. Team momentum is slowed by the absence, as fewer people are now trying to carry on.
As well as this, institutional knowledge is lost too; client history, relationship nuances, workflow shortcuts, and undocumented but needed procedures are all vital parts of business and all need to be relearned when a new person comes on board.
Depending on the role’s complexity, this period of negative productivity can last weeks or even months, and the longer it goes on, the more costly it becomes.
Team morale can also be affected. Worries about increased workloads and loss of confidence in organisational culture and leadership can lead to many issues. Problems that arise could include morale drops, declines in productivity, and, in a worst-case scenario, more turnover. These ripples can add to the induced costs of employee turnover.
These factors and others add up, and the bigger and more complex your business is, the more that will need to be absorbed.
In November 2025, the Office for National Statistics (ONS) Business Insights and Conditions Survey reported that one in seven surveyed businesses had reported that their turnover had increased over the past month.
Additionally, 14% of respondents expect that their turnover would increase in December. Many employees cite work-life balance, skills mismatch, and lack of progression as reasons to change employers, but with the right steps, you can protect your business from unnecessary turnover.
How to Protect Your Business
There are many measures that you can take to protect your business against high employee turnover, and these include:
Revised Onboarding Processes
Onboarding, the process of getting new staff ready for their role, is vital to their life at the business. If you have a poor onboarding experience, it can slow productivity, create confusion, and weaken engagement at a crucial time in a new recruit’s relationship with the company.
In 2024, CIPD’s Resourcing and Talent Planning Report found that 22% of recruiters experience challenges onboarding new hires.
Conducive onboarding procedures consist of clear expectations of job responsibilities, a structured timeline, and accessible resources.
This, combined with an involved management team that tracks and assists the progress of the employee, reduces the lost productivity window and helps keep the cost down.
Strengthen Staff Retention Initiatives
Once the staff members are through onboarding and the original lost productivity window is finished, one of the most important things is keeping their well-being and motivation.
CIPD’s Good Work Index 2025 reported that having prospects for advancement and development correlated with an employee being less likely to quit within the next twelve months.
Even when promotions aren’t available, visible growth and skill development keep employees engaged. By having a system in place that tracks and shows employees’ performance, it can ensure that any and all progress that is being achieved can be shown and celebrated by the team.
Having managers actively give regular feedback on, and using the data to set targets and build goals for each staff member, will also help the staff really feel their growth.
Building a solid understanding of each employee's abilities and skills can also help ensure that utilising internal mobility is a reliable choice, saving recruitment costs and preserving institutional knowledge.
Use Data-Driven Insights
Turnover rarely happens suddenly; behavioural markers can appear months before the resignation. But to be able to see this, a company needs to be documenting data.
Data such as absences, workload handling statistics, performance scores, and engagement can all be very useful when it comes to helping identify rising issues.
Consistent and structured documentation, which can be achieved well with automation and HR software, can help the management team spot arising issues, such as increased amounts of days off, slower task completion, or drops in performance scores.
Using these systems to offer development support, rebalance workloads, and realign with their staff when the problems start to become apparent gives a much better chance at resolving them before turnover starts.
When turnover can cost businesses thousands in lost productivity and weakened culture, preventing it is far more effective than reacting to it. Retention is an investment that compounds.
By ensuring a cohesive plan that helps employees, from onboarding through to long-term development, organisations can protect both their people and their budgets.
Frequently Asked Questions
1. How much does employee turnover really cost UK businesses?
Employee turnover can cost UK businesses over £30,000 per employee when accounting for recruitment, onboarding, lost productivity, and institutional knowledge. Indirect costs such as reduced morale and workflow disruption, often exceed direct hiring expenses.
2. What are the main causes of high employee turnover?
Common drivers include poor onboarding, limited career progression, skills mismatch, excessive workload, and weak management support. Employees are also more likely to leave when they feel undervalued or lack opportunities for development.
3. How can organisations reduce employee turnover effectively?
Businesses can lower turnover by improving onboarding processes, investing in employee development, providing regular feedback, enabling internal mobility, and using data-driven insights to identify disengagement early. Proactive retention strategies are more cost-effective than reactive hiring.
