The Cost of Doing Nothing

Turnover costs are too often underestimated, and are often invisible expenses that businesses don’t account for.

In the hospitality, food, and drinks industry, it’s especially high. In 2021, they averaged at 85% - certainly an improvement from 2020’s 130%, but still higher than the 78% prior to the pandemic.

This industry is treated as transient, but businesses also give their workers reason to be transient. When we look at the preventable reasons why people leave their jobs, we see a list of areas in need of dire improvement in this sector. In 2021, the general population left their jobs for these potentially preventable reasons:

  • Career Development

  • Job Characteristics

  • Well-being

  • Compensation & Benefits

  • Work Environment

  • Management Behavior

  • Work-life Balance

By improving these aspects, not only are organizations enriching people’s lives and taking steps to improve their well-being, they’re saving significant money on the cost of turnover.

Employers that do not track the cost of turnover often lose millions of dollars in profitability that goes unnoticed.

- The Work Institute, 2022 Retention Report

Calculate your organization’s additional potential revenue through employee retention.

How did we get these numbers?

It’s first worth noting that the numbers in the calculator are very generous, and are likely at the low end of what your organization is actually spending on turnover. Let us explain.

We’ve constructed this calculator based on multiple reports and studies. We’ve based employee turnover at $6,000 based on the 2006 research from Cornell University’s report on the true cost of turnover in hospitality although the number is likely higher due to a higher specialization overall required in this industry and inflation.

The Work Institute found that the cost of turnover for organizations has doubled since 2009, with the average cost being $15,000 per employee.

For managers, we know that their turnover can cost an organization anywhere from 20-213% of their salary to replace them. In this calculator, we’ve estimated a manager makes $50k annually, so then estimated 20% of that ($10k per manager). There is more contemporary research and meta analysis that confirms this number.

Additionally, we know that the more specialized the role is, the more it costs an organization to fill it. Accounting for the potentially that specialized roles might also be considered managers, we’ve added $4k per specialized employee.

It’s worth noting that much of this industry is highly specialized, although these roles are socially (and inaccurately) considered low or unskilled, and the more specific your organizations needs are to fill a role, the more specialized those roles are.

Please be aware that this calculated estimation based on the research data, and your true costs of turnover might be less, but it is likely much higher than the number shown above.