The Hidden Costs of Employee Turnover and How to Mitigate Them

rwrhealth.com • May 20, 2025

Employee turnover is more than just a challenge, it's a significant cost to businesses that often goes uncalculated. While many companies focus on the expenses associated with recruiting and training new hires, the true cost of losing an employee is far more complex. For businesses in the healthcare industry, where expertise and experience are critical, understanding and addressing these costs is essential.

The Financial Impact of Employee Turnover

Replacing an employee isn’t just about hiring a new one; it's about the total cost involved in the process. In the U.S., businesses spend between 50% to 60% of an employee’s annual salary to find a replacement. In some cases, this can even reach up to 200%. The situation is no different in New Zealand, where employee turnover has cost businesses a staggering $3.8 billion over a 12-month period.

These numbers underline a critical point: high employee turnover is an expensive problem that spans industries. From lost productivity to the impact on company culture, the hidden costs of turnover can significantly affect a business’s bottom line.

Key Reasons Behind High Employee Turnover

Understanding why employees leave is crucial in mitigating turnover. Studies show that the first 45 days of employment are the most critical, with up to 20% of new hires leaving during this period. The reasons for this early departure are varied:

Mismatch of Expectations: Often, the job is oversold during recruitment, leading to disappointment.
Poor Onboarding: An ineffective onboarding process can shake a new hire's confidence in the company.
Lack of Clarity: Unclear job duties and expectations can leave employees feeling lost and unsupported.
Management Issues: Poor management, including micromanaging or unprepared managers, is a common reason employees leave.
Limited Growth Opportunities: Employees need to see a clear path for growth within the company.
Infrequent Feedback: Regular check-ins are essential to keep employees engaged and aligned with company goals.
Rigid Workplace Policies: A lack of work-life balance or a hostile work environment can drive employees away.
Inadequate Support: Employees need to feel supported by their organization, both personally and professionally.

Even beyond the initial phase, turnover remains a risk, with nearly a quarter of new employees leaving within their first year. This highlights the importance of consistent and long-term engagement from both HR and management.

Breaking Down the Costs of Turnover

The costs associated with turnover can be categorized into six main areas:

Replacement Time: It can take 8-12 weeks to replace a knowledge worker and even longer for more senior roles. During this time, productivity suffers.
Training Costs: Training new hires is costly, involving not just the trainee but also the trainer and their manager, often the company’s most efficient employees.
Lost Productivity: Frequent turnover negatively impacts morale and productivity, with new hires taking 6 to 9 months to reach full productivity.
Cultural Impact: High turnover can erode company culture and lower morale, affecting how long remaining employees plan to stay.
Higher Costs for External Hires: External hires often demand higher salaries, which can create wage disparities within the company.
Client Relationship Impact: High turnover can disrupt client relationships, leading to lost business and compromised timelines.

Steps to Reduce Employee Turnover

Reducing turnover begins with recognizing its full cost. By aligning turnover issues with business metrics, companies can better understand the impact and take action.

Step 1: Awareness and Alignment

Educate your team about the costs of turnover and ensure that these are tied to real business metrics. This will foster a sense of responsibility to hire well and retain employees.

Step 2: Build a Strong Onboarding Program

An effective onboarding program is key to employee retention. Make sure new hires feel welcomed and supported from the moment they sign their contract through their first six months.

Step 3: Innovate and Automate

Consider implementing an automated onboarding process to streamline administration and ensure consistency in how new employees are integrated into your organization.

Step 4. Exit Interviews

Seek to understand why employees are leaving your business, collate the data and look for common themes, address any issues to reduce staff turnover.

By focusing on these areas, you can mitigate the hidden costs of employee turnover, creating a more stable and productive workforce.

Data Source: https://action.deloitte.com/

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Leadership Starts With You: Why Your Health Is Your Responsibility

By RWR Group Marketing • July 14, 2025

Let’s be honest. When you're running a team, driving results, showing up for clients, and solving problems before most people finish their first coffee, it’s easy to forget the one person you need to lead first: yourself. But the truth is, if you’re running on empty, everyone around you feels it. This is your friendly reminder that taking care of your mental and physical health is responsible leadership. You Can’t Lead Well If You’re Running on Empty There’s a strange badge of honour in pushing through exhaustion, skipping lunch, or catching up on work at midnight. But burnout doesn’t make you a better leader. It makes you reactive, distracted, and less present for your team. You don’t need to hit rock bottom to permit yourself to reset. Taking care of yourself is part of the job. Your Team Feels Your Energy You might not notice it, but your team does. The mood you bring into the office, the way you handle pressure, and how present you are in meetings all reflect how you’re feeling inside. Leaders who are well-rested, mentally clear, and physically energised create environments that are calmer, more productive, and more human. Wellness as a Leadership Strategy Think of your well-being as a core part of your leadership toolkit. Your ability to make good decisions, regulate stress, show up with empathy, and motivate others all hinge on your personal health. Some of the best leaders are the ones with clarity, energy, and emotional stability. That comes from proper rest, good fuel, movement, support, and boundaries. You don’t have to become a wellness influencer overnight, but small shifts compound over time. Nobody Else Can Do This For You You delegate. You lead. You lift others. But here’s the kicker: no one can take care of your well-being for you. Yes, workplaces can and should support wellness. But ultimately, the responsibility sits with you, and that’s empowering because you get to choose what your baseline looks like. Wellbeing Is Part of the Job Description If you’ve been waiting for permission to put your health first, here it is. Because when leaders take proactive care of themselves, everyone benefits. You don’t have to overhaul your life. Just start. Take a breath. Drink some water. Move your body. Call a friend. Go to bed earlier. Then do it again tomorrow.

The Real Cost of Healthcare Staff Shortages and Why Recruitment Matters More Than Ever

By RWR Group Marketing • June 11, 2025

If you’re working in the health sector, you don’t need statistics to tell you how stretched the system is, you feel it every day. From hospital corridors to aged care homes, and midwives to radiographers, workforce shortages are straining every corner of care. And it’s not slowing down. The Numbers Speak Volumes Nursing : By 2025, Australia is expected to face a shortage of over 85,000 nurses. That’s not just numbers, that’s real pressure in EDs, wards, and community health services. Midwifery : Almost 10,000 midwives are short. Maternity services are under stress. Allied Health : Physiotherapists, OTs, speech pathologists, and radiographers are in critical demand in both public and private sectors. Theatre & Anaesthetics : Surgical delays are increasing because there simply aren’t enough technicians to support the load. Aged Care : With turnover rates hitting 50% in some facilities, continuity of care is becoming harder to guarantee. What’s driving this? An aging workforce, high levels of burnout, and increasingly complex care needs. Over 40% of healthcare workers report stress-related symptoms. That’s not sustainable for anyone. At RWR Health , we don’t just place candidates. We partner with people. We believe recruitment plays a frontline role in supporting the sector, finding the right talent, helping organisations retain them, and offering strategies that care for the carers. Because the truth is, we’re not just solving staffing problems, we’re helping build a stronger, more resilient healthcare system. If you're in the sector, we want to hear from you. Let’s talk challenges, but more importantly, let’s talk solutions. Call us today!

RWR Health Launches in Australia

By RWR Group Marketing • June 5, 2025

RWR Health has officially launched in Australia, expanding its trusted recruitment expertise to Sydney, Melbourne, Brisbane, and Perth. Backed by the award-winning RWR Group, the agency brings over 30 years of healthcare experience and specialist recruitment knowledge to the market. With a fresh approach to candidate engagement, talent mapping, career planning, and employer branding, RWR Health addresses a growing market need for smarter, values-led recruitment. The agency blends AI-powered sourcing with deep market intelligence and a unique human approach, ensuring that employers connect with professionals who truly align with their values and culture. “Our launch in Australia represents a pivotal moment,” says John Caldwell, Global CEO of RWR Group. “We’ve built a reputation for specialist recruitment that doesn’t compromise on quality or care. Now, we’re bringing that proven model to healthcare organisations across Australia, where the need for high-impact, values-aligned talent has never been greater.” RWR Health stands apart by combining predictive technology and deep local knowledge with personal connection, delivering not just speed and efficiency, but long-term fit. With 30+ years of healthcare experience and a network of over 600,000 candidates, the team is equipped to fill roles across clinical, non-clinical, and executive functions, often in under 25 days. RWR Group, founded in 2001, is the force behind industry-leading recruitment brands across Australasia, including Retailworld, Hospoworld, RWR Construction, and Executive Search. With 22 offices across the region and an award-winning leadership team, the group continues to set a new standard in industry-specialist recruitment. For employers ready to grow or candidates seeking purpose-driven roles, visit www.rwrhealth.com or connect with the team on LinkedIn.