The Hidden Cost of Dysfunction: What Employee Turnover Is Really Costing Your Company

Most business leaders understand that employee turnover is a challenge. But few realize just how much it actually costs.

When someone resigns, it’s not just an empty desk you need to fill. It’s hours of lost productivity, morale dips, recruitment expenses, and onboarding time that collectively drain your team’s energy and your company’s bottom line.

So, What Does It Really Cost to Lose an Employee?

Depending on the role, replacing an employee can cost anywhere from 40% to 200% of their annual salary. Consider this:

• Frontline employees: ~40% of annual salary
• Technical/professional roles: ~80%
• Managers and leaders: ~200%

Let’s take an example more familiar to many small businesses: If a frontline employee makes ฿18,000 per month, the cost to replace them could be anywhere from ฿7,200 to ฿13,500—and that’s just the financial calculation. Add in lost time, fractured workflow, and the toll on team morale, and the actual impact is much higher.

And for more senior roles? That cost rises exponentially—often reaching double the employee’s annual salary.

The Breakdown of Turnover Costs

Direct Costs:

• Advertising the position
• Recruiter fees
• Time spent screening and interviewing candidates
• Onboarding and initial training

Indirect Costs:

• Lost productivity during vacancy and ramp-up
• Time other employees spend covering the workload
• Team morale and trust impacts
• Mistakes made during the learning curve
• Loss of institutional knowledge

And perhaps most importantly: the opportunity cost. While you’re backfilling and training, your team is less focused on innovation, client care, and forward momentum.

Why People Leave Has Everything to Do With Culture

Data from the Work Institute shows that the majority of turnover is preventable. Common reasons employees give for leaving include:

• Poor management or lack of support
• Mismatched roles
• Toxic team dynamics
• Lack of growth opportunities
• Miscommunication or misalignment of expectations

These issues are rarely solved by compensation alone. Instead, they point to deeper organizational patterns: how leadership communicates, how teams collaborate, and whether people feel heard and valued.

Dysfunction Is Draining Your Resources

When teams are misaligned, communication breaks down. Tensions build. Leaders repeat themselves. Accountability slips. Good employees underperform. And eventually, they leave.

Every time that happens, your organization loses more than just a team member. You lose time. Trust. Focus. Money.

What Can Be Done?

If you want to reduce turnover, start by examining the way your team works together:

• Clarify expectations early and often. Misalignment is a root cause of disengagement.
• Invest in management development. Most people don’t leave their jobs; they leave their managers.
• Create feedback loops. People stay when they feel heard, seen, and valued.
• Define roles around strengths. When people are set up to succeed, they perform better and stay longer.
• Build psychological safety. Teams that can disagree, reflect, and adapt are more resilient—and more loyal.

You don’t have to fix everything at once. But ignoring dysfunction only guarantees that turnover—and its cost—will continue.

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Want to dig deeper into what’s driving turnover in your organization? Feel free to get in touch.

Janna Hanover
TeamBridge Thailand
teambridgethailand.com

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Sources:

• SHRM: The Myth of Replaceability
• Gallup: Employee Turnover: Preventable but Often Ignored
• Work Institute: 2022 Retention Report
• Center for American Progress: Cost of Turnover Study