A common turnover-related statistic is that when an employee quits or is fired, the cost to replace them is roughly 1.5 times their salary. The reasoning is that it takes time and money to hire and onboard their replacement.

However, this equation is incomplete.

The Real Turnover Cost Equation

The true cost of turnover is:

Turnover cost = 1.5 times salary +/- net team productivity

This means that if a team member is a net negative on team productivity, then losing that person will actually improve team productivity. If increased team productivity leads to increase profits (which it usually does, but not always), then gains to team productivity is beneficial to the business. And, despite that fact that replacing the individual will cost money, it will be a net positive for your company.

Let's say you have a team member that is, by all measures, expert at their craft. Yet, they are a culture mismatch. Perhaps they continuously miss team meetings or disrespect team norms. This type of individual, no matter how good they are individually, is a net negative on the team. Ask yourself: would your team productivity increase or decrease if they were no longer on the team?