Measuring the Cost of Employee Turnover

September 28, 2018

Traditionally, companies have measured turnover with a single goal — to determine how often job openings are being created. However, People Power of C-Stores, the newest study from the NACS/Coca-Cola Retailing Research Council, examines the impact employee instability has on sales and profitability.

The numbers in the report are eye-opening and demonstrate the importance of building employee engagement through better management practices.

The study shows that replacing a single hourly employee can cost 16 percent of annual wages. That’s a cost of more than $3,300 every time a $10-per-hour staffer leaves.

To demonstrate the impact of employee turnover on competitive strength, the study examines one company, “Firm X,” which has a better employee engagement score and a slightly lower turnover rate than industry averages. Firm X has an engagement score of 59 percent and a turnover rate of 80.5 percent. That turnover rate is 7.4 percent lower than the industry average, which, in turn, leads to a 4 percent advantage in inside gross profit, or $24,000 more gross profit dollars per year.

The study shows that a more engaged workforce results in countless other benefits, but that single number demonstrates just how much is gained on the bottom line from retail retention and a focus on engagement.

The study, available for download below, outlines simple steps and lessons that store-level management can follow to help improve their skills and ability to drive employee engagement.

The report can be downloaded for free here: