A few years ago, I worked with a particularly out of touch CEO, one who experienced a high employee turnover during the previous 12-months. It still baffles me how proud that they were about cleaning house, and the thorough justification I received for each round of exits. While explaining how he determined they weren’t performing to his standard and it was time to start fresh, I could only wonder how much more massive this person’s ego could get.

The awakening came when we broke down the turnover costs for the business.

Roll up your sleeves. Time to get dirty and think about the impact your organization feels each time someone departs. There are the easily recognized direct costs, and beyond is a dangerous ripple effect on an organization, which includes an impact on revenue, partners, and remaining staff.

Direct Costs. Turnover costs an organization between six and nine months of an employee’s wages, which covers costs for recruiting, hiring and training the new person.

Lost Revenue. Relationships are impacted each time someone leaves an organization, many of which are tied to revenue. Review the income and business development efforts at risk, solely because the person leaving has a primary relationship. Even if the person departing your organization was responsible for a process within the organization, the negative impact that occurs from their absence is a potential downstream impact on revenue. It’s impossible to bring a new person in that will 100% cover all tasks and objectives from day 1, and a failure to provide consistent communication to a client, or a newly broken process will cause issues.

External Partners. Interactions with vendors and partners are strategically crafted with purpose, and they are crucial to the advancement of the organization. Until the replacement is 100% up-to-speed, the risk of encountering hiccups that will put the relationship at risk is high. It could take weeks, months, or even a couple years. When relationships weaken, partners see less value and are not working as hard to identify new opportunities and keep costs under control.

Internal Impact. The organization itself will be hit with a wave of doubt, putting teams at risk of losing focus on the vision, and ultimately becoming disengaged if the feeling lingers. Consider how a departure impacts the other people within the organization. And how does it affect your critical processes? What does it cost you to have valuable people training the new person and ensuring these procedures don’t break? What advances are being dropped, while the focus is on the new person?

Depending upon role, the extended cost of turnover easily adds another year of wages. More if it’s essential personnel or someone where a partnership would dissolve. Think about that for a moment, with each departure from your organization; you are encountering a cost impact of nearly 2-years of a new employee.

Now, ask yourself, isn’t it smarter to help that existing employee grow and change their mindset? Foster growth. Provide the training and responsibility to own a part of how the organization succeeds. Spend the time getting an existing employee closer to your ultimate goal, rather than training a new employee do that original job.