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How much does it cost to replace the average employee?


Replacing an employee is an expensive proposition.

In addition to direct costs tied to recruiting, onboarding, and training new hires, there are also incidental costs, including decreased productivity, knowledge loss, and reduced morale among the departed employee’s colleagues.

While there are variations depending on company, industry, and role, the average cost of replacing an individual employee is conservatively estimated to be 150% of their annual salary, according to Gallup.

In our recent study, the average salary was around $70,000. Based on that figure, it would cost approximately $105,000 to replace just one employee. For an organization of any substantial size, those numbers add up quickly.


Company size

Number of employees





Percentage of employees wanting
to change jobs next 12 months1


Percentage of employees who will
actually change job2


Total number of employees
changing job3





Percentage of positions that need
replacing following employees leaving4


Potential number of employees
need replacing





Average US salary1


Average cost to replace employee5
(On average 1.5x salary)


Potential total cost per year





1 Based on respondents to our Winning with wellbeing survey
2 CNBC, 1 in 4 workers quit their job this year—here’s what companies are getting wrong about retention            
3 Calculation: Number of employees in a company * Percentage of employees wanting to change jobs * Percentage of employees actually changing jobs
4 Assumption that only 80% of positions will be need to be refilled following employees leaving, as some work will be distrubuted elsewhere
5 Gallup, This Fixable Problem Costs U.S. Businesses $1 Trillion                

The cost of replacing an employee is a significant and growing problem, exacerbated by the massive numbers of employees leaving their jobs in search of greener pastures.

A record 47.4 million people voluntarily left their jobs in 2021, according to the U.S. Department of Labor (DOL) and it shows no signs of slowing down as American employers face a second year of the Great Resignation.

That trend came through loud and clear in Alight’s recent DE&I research. Just 38% of respondents expressed overall satisfaction with their employer, while barely over half (53%) said they’re likely to be with their current employer in 12 months.

It would be easy to assume these are merely job-hopping young professionals still trying to find their place in the working world. However, it’s actually mid-career professionals aged 40 to 45 and women who are leading the turnover trend, according to people analytics firm Visier.

The loss of such valued contributors causes more severe disruptions among their teams and results in a higher cost and longer time to replace them. 

Why are people leaving?

Why are employees feeling such an overwhelming sense of wanderlust? A number of converging factors are to blame.

While some workers are jumping ship for traditional reasons, like dissatisfaction with their pay, a belief that opportunities for advancement are limited, or a lack of feeling respected at work, others are in search of something that promises to be more satisfying in the long run, according to Pew research.

The impact of the pandemic cannot be overstated, particularly when it comes to how people view the role that work plays in their lives.

Extra time spent with loved ones, the comforts of home, and the very real possibility of losing friends and family to COVID caused many people to reevaluate what’s important to them. Across industries and job levels, they began giving serious consideration to where, how, and why they work.

For many, the prospect of a big salary and corner office began to lose its appeal, replaced by visions of a job that gave them a sense of purpose and a benefits package that would help protect and care for their loved ones.

Employees want to feel valued and protected but most don’t believe their employers have their back. Unfortunately, just 35% of Alight survey respondents said they trust that their employer develops benefits plans in their best interest.

What can we do to retain people?

Our results indicate that employers offering the benefits that employees need will be best positioned to restore trust, loyalty, and job satisfaction.

In other words, they will be less likely to seek out new opportunities elsewhere and may even recommend their employee to friends and family seeking something more fulfilling.

To counter the Great Resignation and mitigate the astronomical costs of replacing an employee, you need to go beyond offering basic benefits like health and dental.

Consider expanding your benefits packages to include coverage for extended families. Granted, there are many barriers – including higher costs and legal issues in some jurisdictions – to expanding access to healthcare plans in this manner.

However, organizations should recognize the misalignment between some of their offerings and workers’ household needs and seek ways to make their benefits more inclusive and flexible where possible.

With a growing number of people serving as caregivers for ailing parents or disabled relatives, the ability to provide healthcare benefits and health navigation services for these individuals can go a long way.

Likewise, pet insurance is a low-cost means of showing employees you recognize their furry family members are important, too.

Finally, financial benefits, like tuition assistance, life insurance, and long-time disability ensures that family members won’t struggle to stay afloat if something happens to the employee.

Above all else, strive to be authentic in everything you do. Today’s employees crave authenticity. They can recognize an employer just going through the motions a mile away.

Needless to say, they’re not going to stick around long. The numbers don’t lie. Replacing those folks is expensive so put your energies toward giving them what they need and what they want – or risk losing them.   

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