The true cost of losing an employee


Building Recruitment managing director and Building Today columnist Kevin Everett says losing staff is more costly than you think, and provides 10 tips for retaining valuable talent.

Losing staff is a right pain in so many ways. However, it’s more costly than you think. Research has shown the following stats when replacing someone:

For entry-level employees, it costs between 30% to 50% of their annual salary to replace them.

For mid-level employees, it costs upwards of 150% of their annual salary to replace them.

For high-level or highly specialised employees, you’re looking at 400% of their annual salary.

Hopefully I now have your undivided attention. The above shows that your employees are your company’s biggest asset. 

With massive skills shortages, and being unable to bring skills into New Zealand due to border controls, we are seeing many staff being head hunted or leaving employers because they are unhappy.

This either results in employers having to counter-offer, resulting in increasing costs on already tight margin projects, or having to look for a replacement when options are extremely difficult.

It also places the employer in a very difficult situation and the following questions must be answered:

Are they staying for the money?

Will they leave for more?

What was the real reason they wanted to leave?

Have I only papered over the cracks for the moment?

Who else has been approached?

How can I prevent this happening again?

I have spoken about this regularly, and it feels like a scratched record at times, but it is a massive issue facing all large and small companies in the sector.

Keeping staff happy is vital for the success of your business, and I am pleased to say that we are seeing more of our clients doing things outside the box when it comes to keeping good staff.

Creating the right culture and making your workers feel valued is vital.

Unfortunately, some still do not get it, so I’ll share with you the hidden financial and economic costs when you lose a staff member.

Advertising costs.

HR costs.

Recruitment agency — briefing and fees.

Time for senior management or hiring managers.

Hiring and screening costs.

Behavioural and/or skill and psych tests.


Ongoing training.

Temporary staff hires.

Moving and hiring costs.

Time spent placating or reassuring clients.

Building relationships with suppliers, subcontractors or clients.

Managing others’ workloads.

Managing more unhappy staff.

Loss of your trainer’s productivity — remember, that could be you!

Not training or inducting correctly, resulting in that new worker leaving and the process starting again.

For staff making the decision to leave, an employer is often a symptom of the company’s perceived employee worth, and their proper value is undermined, or they feel overworked and stressed or lacking opportunity to grow, or have little job satisfaction or security.

The costs associated with losing an employee exceed not only the economic but cultural ramifications for your company too.

I have discussed this in the past, but it’s always good to be reminded that when we interview job seekers, these are the main reasons they are looking to leave:

Company culture has changed.

Loss of staff engagement, feelings of inadequacy, they feel let down, may not feel they can accomplish or achieve as much as team member(s) that leave.

Additional work is put on them — high expectation and lower remuneration equals employee discontent.

Client “relationships” are compromised, causing concern with job security.

Loss of productivity and quality of workmanship, resulting in clients becoming unhappy and frustrated.

Always putting out fires, working long hours and being under stress.

For businesses to succeed, you require:

A mix of talent.

Opportunities for growth.

Valued relationships with internal and external stakeholders.

Professional leadership.

Personal development.

Economic value (salary).

Individual and collective reward (culture and standards).

Work/life balance.

And businesses, like any group, workplace or community, should actively demonstrate and achieve a feeling of belonging and understanding, coupled with open and transparent processes and communication.

My top 10 tips for retaining valuable talent are:

Have strong core company values and discuss with your team.

Create personalised benefits to individual employees (everyone has different needs).

Recognise talent and reward improved work standards, and set clear expectations.

Promote from within.

Actively encourage innovation and open discussion.

Hold social events.

Perform regular staff performance reviews.

Help individuals to create a plan to achieve professional development.

Adjust and adapt to individuals’ changing personal circumstances.

Prioritise healthy workplace processes.

Making sure you have these simple processes will reduce the need to use businesses like mine to replace staff.

We want to find you additional staff due to your growing success, or to replace the ones you have promoted from within.

Businesses like that are a huge attraction to those highlighted above, and those practices create loyalty and encourage staff to share ideas that can improve your business and bottom line.

Remember to talk to us about our special Registered Master Builder members rates, and our monthly instalment terms for our permanent recruitment, or for us to quote you labour from our labour hire division. For more information visit

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