Cost of bad hire in lubricant, fuel and oil industry

5 Hidden Costs Of Employee Attrition

Many think high employee attrition just results in expenses such as advertising or recruiter costs to hire new employees. But this is not the whole story, there are some hidden costs that have an even bigger impact on a company’s bottom line.

Employee attrition vs. employee turnover

It’s important to highlight employee attrition and employee turnover are not the same thing. 

The primary distinction is that employee turnover is a voluntary departure, the employee quits of their own accord.

Employee attrition includes voluntary and involuntary departures. For example, if employees get fired or made redundant you would count those scenarios as attrition. 

Companies can take proactive steps to prevent staff attrition and lessen its impact on their organisation by recognising the below expenses.

#1 Cost: Lost Productivity

Regrettably, employee attrition often means that the organisation is taken by surprise, and left unprepared to immediately find a replacement. In this scenario, the organisation must find a way to continue to operate for some period of time with fewer employees than they planned, while achieving the same productivity goals. 

Losing a productive employee can have a high cost to productivity, especially when existing employees are unable to pick up the extra workload effectively due to a lack of skills, knowledge or time.

For example, losing a productive employee in sales can mean losing the revenue that the sales associate would have otherwise brought in. Or losing a productive employee in research and development can significantly impact product delivery timelines.

#2 Cost: Employee Burnout

When organisations are understaffed, the danger of burnout rises for the personnel who are left behind. In a poll of burnt-out workers by Simple Texting, 41.1% mentioned personnel or workforce shortages as the reason for their burnout. A separate survey suggests burnout due to understaffing is more prevalent among younger workers (66%), whom many organisations rely on to grow into tomorrow’s leaders. 

Employee burnout is unfortunately as prevalent as it is expensive. According to the American Psychological Association, workplace-related stress costs the US economy over $500 billion and 550 million lost workdays every year.

#3 Cost: Knowledge loss

Losing an employee typically means losing not just the increased productivity associated with their work performance, but also the skills and knowledge they had too. 

This information, sometimes referred to as “tribal knowledge,” is not understood by other workers, and it is not efficiently recorded in a manner that a backfill can readily reference. Even in organisations with strong documentation cultures and adequate resources to teach new workers, tribal knowledge is quite widespread. 

According to the HR Daily Advisor, an estimated 42% of the necessary skills to execute a particular profession well is known exclusively to the individual already in that capacity. Furthermore, 60% of employees say it is difficult, extremely difficult, or practically impossible to receive critical information from coworkers. 

It is expensive for firms when workplace knowledge is lost because workers must spend time and effort restoring that knowledge in order to perform successfully in their positions.

#4 Cost: Lower morale

Employee morale is one of the first things you’ll notice after losing an employee. As more workers depart, those that remain may have lost a valued work companion, which is more important than you may believe.

According to research conducted by Office Vibe, 70% of workers believe that having a buddy at work is the most important factor in having a pleasant work life. Furthermore, 50% of workers who had a best buddy at work expressed a greater connection to their company.

As a result, if one person departs, the culture and dedication of your remaining workers to the organisation and their job can suffer too.

Employees will question why their coworkers are departing. And the discovery of the reasons why people are leaving can have a further impact on lowering morale and worsening your workplace culture.

#5 Cost: Onboarding spending

After a recruitment process is concluded and the right candidate is found, the expenses of training each new employee replace the costs of acquiring them. 

Employee onboarding is a costly and time-consuming process, which can take around three months and includes cooperation from both HR and current workers across the organisation. 

In practice, the true time to onboard may be substantially longer, with some experts suggesting that new employees can be totally productive in their new capacity after one to two years. 

There is also the constant danger of a mishire with the introduction of every new employee, as well as the expenses and hazards of sacking that individual and recruiting for their replacement.

However, the costs of ineffective onboarding and training far outweigh the investment. And if you have a solid hiring process and selection criteria you can go minimise risks and get the right people into your business. 


If you would like to learn more about talent attraction and retention specifically in the lubricants and fuels industry, contact ABN Resource experts for more information.