What a resignation actually costs
Replacing a good employee runs six to nine months of their salary once everything is counted. The raise that would have kept them costs a fraction — here's the whole math.
Replacement cost is one of those numbers that sounds inflated until it gets itemized. Recruiting. Training. The months the seat sits empty. The productivity dip while the new person learns what the old one knew cold. Added up, replacing a good employee tends to run six to nine months of their salary — call it $30,000 on a $50,000 role.
Beside that figure, the raise that would have kept them looks almost comically small: $2 an hour is about $4,000 a year. That's the entire comparison — $4,000 against $30,000 — and yet in most companies the market-check happens only after the resignation letter is already on the desk.
The companies that keep people treat this as a standing habit rather than a policy document: once a year, check what the best people would earn across the street, and move first when the gap is real. The timing matters more than it seems. A counter-offer made after a resignation buys less loyalty for more money — the person has already pictured leaving, and about half still go within the year. Paying a little early only looks expensive until it's priced against the alternative.
Filed under Hiring & People · Field guide: The Economics of Keeping People