Talent quality, turnover, and employee wellbeing
How much does it cost to lose a key player? While accounting standards ignore turnover costs, the economic reality is brutal. Research cited by AwardCo (drawing on Gallup data) indicates that the cost of replacing an individual employee can range from one-half to two times (2x) the employee's annual salary. These costs hide in plain sight: lost productivity, recruiting fees, onboarding time, and the 'knowledge gap' left behind. For a 100-person firm with an average salary of $50,000, high turnover can quietly bleed over $600,000 to $2.6 million annually from the bottom line.
https://www.awardco.com/blog/employee-turnover-ratesWe audit 'Retention' as a capital allocation metric. If a CEO spent $2 million on a machine and then left it to rust, investors would revolt. Yet, many CEOs let $2 million worth of human capital walk out the door annually without scrutiny. We view retention strategies (like recognition and clear career paths) as 'Asset Maintenance.' Companies that minimize this 'Replacement Tax' have a structural margin advantage over their churn-and-burn competitors.
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