A recent study by economics consultancy Oxford Economics found that the average cost of replacing a member of staff when they leave is more than £30,000.

The survey was carried out in the legal, retail, accountancy, media, advertising, IT and technology sectors and found that the overall financial impact of staff turnover amounts to £4.13bn per year, at an average cost of £30,614 per employee.

The survey found that two main factors make up this cost:

  • the cost of lost output while the replacement employee becomes productive and
  • the cost of physically recruiting and absorbing a new worker.

On average, workers take 28 weeks to reach optimum productivity, costing £25,181 per employee in wages paid. Companies with under 250 employees are better at this, with new employees only taking 24 weeks to reach productivity. Small firms with up to 10 employees were found to be the best – new employees reached productivity in just 12 weeks.

The actual logistical cost of replacing an employee includes job advertising costs and agency fees, as well as the time needed to interview candidates and prepare paperwork.  On average these costs were £5,433 and included:

  • £3,618 on hiring temporary workers before the new employee starts
  • £767 on management time spent interviewing candidates
  • £454 recruitment agency fees
  • £398 spent on advertising the new job
  • £196 in time spent by HR to process the paperwork for the replacement.

By Sector –

  • The legal and accountancy sectors had the highest cost to replace workers, at an average cost of just over £39,000, and the longest time to reach productivity of 32 weeks.
  • While workers in the media and advertising industries cost approximately £25,000 to replace, taking only 20 weeks to reach their best productivity.
  • The cheapest employees to replace are retail workers, although still costing their employers an average of £20,000 over 23 weeks.

So try to keep your staff happy and retain your valuable employees!  Good businesses always try to retain and develop their staff and this is yet another reason why it is important to do so.  You can read details about incentivising staff with a bonus scheme here.


If you are an Employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to us at The HR Kiosk  – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

Photo by Craig Sunter