We’ve found that business owners – especially those in middle market companies – are often surprised by how much it costs to replace an employee.
According to Zane Benefits, a CAP study found average costs to replace an employee are:
- 16% of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). So the cost to replace a $10/hour retail employee would be $3,328.
- 20% of annual salary for mid-range positions (earning $30,000 to $50,000 a year). For example, the cost to replace a $40,000 manager would be $8,000.
- Up to 213% of annual salary for highly educated, executive positions. That means the cost to replace a $100,000 CEO is $213,000.
With costs this high, it’s wise to invest in hiring and retaining the right people for your organization. The resources on the McDermott Associates website can help you design compensation plans that help you recruit and retain individuals who can help your organization grow.