How much can I save in Employee Turnover Costs with an HRMS?
Annual Employee Turnover Savings with HR Software
Employee turnover is costly—not just in terms of recruiting, but also the training, ramp-up time, and the dip in productivity while you search for a replacement. It's a hidden cost that adds up quickly and takes a toll on your business. But with an HRMS, you can reduce turnover rates and save a significant amount by keeping employees engaged and improving their overall experience at your company.
The Cost of Turnover
The financial hit of turnover is often more than companies realize. When an employee leaves, the direct costs include recruitment ads, agency fees, and the time HR and managers spend reviewing resumes, conducting interviews, and onboarding new hires. Then, there's the indirect cost of lost knowledge, team disruption, and the time it takes for a new hire to become fully productive.
How an HRMS Can Help
An HRMS supports employee retention by automating feedback systems, improving communication, and offering employees clear development paths. It enables better performance management, more frequent check-ins, and a more transparent process, all of which help keep your employees engaged and loyal.
By reducing turnover, you save on all those hidden costs—and the value of an HRMS becomes clear.
Cost-Saving Formula
Cost to replace an employee: ~33% of their annual salary
HRMS reduction in turnover rate: 1 employees/year
Example:
- Average salary with 20% overhead: $75,000/year
- Reduction in turnover rate by 1 employee/year:
$75,000 × 33% × 1 = $24,750 saved annually
When turnover drops, the savings aren’t just immediate—they continue to grow as your company avoids the cycle of high recruitment and training costs.
Investing in Retention Pays Off
By using an HRMS to streamline communication, performance tracking, and employee engagement, you invest in your team’s retention and stability. And the numbers speak for themselves—reduce turnover and your business can save tens of thousands of dollars annually.