How to calculate the cost of turnover and absence in a company? A practical guide for HR departments

In this article we show how to calculate the cost of turnover and absence in a company, why this data is crucial for HR departments and boards, and how to use LongLife's free calculators for a quick diagnosis of the situation in your organisation.

Turnover and absence metrics are becoming not only a tool for managing staff, but also a strategic measure of an organisation's health. They increasingly form part of management analyses, ESG reports and internal HR audits.

Managing labour costs without taking employee absence and departures into account is like running a company with the cost controller switched off.

ZUS data for 2024 shows that Poles are taking sick leave more and more often. As many as 25.5 million medical certificates of temporary incapacity for work were registered, 300,000 more than the year before. The total number of days of sickness absence came to 253.5 million, a clear increase compared with previous years.

In a company employing 100 people, where each employee is on sick leave for an average of 11 days a year, that means 1,100 days of absence a year. It is as if more than 4 employees on a full time contract did not work at all for the whole year.

With an average monthly employment cost of PLN 8,000, that means annual losses of more than PLN 400,000, arising from absence alone. And that is without counting the cost of cover, operational downtime or the extra load on other team members.

High turnover does not only mean vacancies and the need to run further recruitment. It is a systemic disruption of organisational continuity, which translates into lower effectiveness, higher costs and the loss of key skills.

Every employee who leaves the company takes with them something that cannot be recreated through onboarding: contextual knowledge, client relationships, an understanding of the organisational culture and project experience. When managers or technical experts leave, that loss can be multidimensional: covering know-how, mentoring and team stability.

In addition, turnover:

• burdens the team - the remaining employees have to take over the departing person's duties, which increases the risk of overload and burnout,
• weakens morale - when departures become regular, uncertainty grows and the organisational culture erodes,
• slows processes down - a new person needs weeks, sometimes months, to reach their predecessor's level of effectiveness,
• generates indirect costs - for example linked to losing clients, delays in delivering projects or the need to correct mistakes made by less experienced people.

Work Institute data shows that the average time for a new employee to adapt fully is between 3 and 8 months, and the cost of losing them can reach as much as 150-200% of their annual salary, particularly in specialist and managerial roles¹.

All this makes turnover one of the most underestimated operating costs in a company. At the same time, it is one of those that can genuinely be reduced. That requires not only monitoring the metrics, but also diagnosing the reasons for departures early, and investing in development, communication and wellbeing.

HR metrics such as turnover and absence were until recently treated as internal operating parameters - reserved mainly for the HR department. Today they are becoming a critical element of strategic management - on a par with operating costs, sales results or EBITDA.

They are not just data, they are warning signals that allow organisations to:

• identify staffing risks before they materialise,
• measure the quality of leadership and organisational culture,
• assess how effective wellbeing and retention activities are,
• make better investment decisions about people.

From the board's point of view, these metrics are like a thermometer showing whether the company is running at a healthy rhythm, or perhaps „running a fever” and heading towards structural burnout.

High turnover? It may signal problems with leadership, a lack of development paths or overload.Rising absence? Often it is a symptom of chronic stress, poor ergonomics at work or the team's mental exhaustion.

Importantly, this data increasingly lands on the desks of investors, auditors and stakeholders. Companies able to demonstrate low turnover, a stable team and proactive care for employee health are today assessed better in due diligence processes, are more attractive to talent and less risky from an investment point of view.

Today's HR therefore cannot talk only about soft measures. It has to speak the language of data, which the board understands and which translates into financial decisions, the company's reputation and its capacity for long-term growth.

To help companies estimate staffing costs quickly, LongLife has created two easy-to-use tools. They can be an excellent starting point for deeper analysis.

With these calculators you will:

• gain arguments for a conversation with the board,
• prepare real data for budgeting wellbeing activities,
• create a solid basis for ESG reports or presentations to investors.

The cost of turnover and absence is not just numbers in Excel. It is real money that can be lost or recovered by making wise decisions. The sooner you start analysing the data, the easier it will be to create strategies for retaining talent and looking after employee health.

Go to the LongLife calculators:
https://www.longlife.pl/kalkulatory

Sources:

1. Work Institute -2022 Retention Report
2. Gallup -The True Cost of Turnover, 2023
3. Polish Social Insurance Institution (ZUS), data for 2024