What Does Employee Turnover Really Cost?

Although the analysis is based on international data, the findings point to challenges that are also highly recognizable for Danish companies: increasing complexity, pressure on HR resources, and a labor market characterized by high mobility.

When One Resignation Creates Ripple Effects

According to Paychex’s analysis, losing an experienced employee costs organizations, on average, the equivalent of a six-figure amount in Danish kroner per departure — and these costs have increased significantly year over year. However, the financial figures only reflect the most visible part of the issue.

When an employee leaves, valuable knowledge, relationships, and experience leave with them. Tasks must be redistributed temporarily; productivity slows, and colleagues take on additional responsibilities. This increases the risk of errors, stress, and declining engagement. Often, the full consequences only become apparent months later, when projects are delayed, or additional employees begin considering new opportunities.

Voluntary Turnover Is the Largest – and Most Influential – Factor

The report shows that a growing share of employee turnover is voluntary. This is a critical insight, as voluntary turnover is far more preventable than involuntary departures.

The underlying causes are well known – also in Denmark. A lack of work-life balance, sustained high workloads, and limited development opportunities gradually erode employee engagement. The challenge is that organizations often only become aware of the issue once the resignation has already been submitted.

Turnover Becomes More Complex as Organizations Grow

Paychex’s data shows that the impact of employee turnover changes as an organization scale.

In smaller organizations, the absence is felt immediately, as there may be no one to take over key responsibilities. In larger organizations, turnover creates more complex ripple effects, including lost momentum, disrupted team dynamics, and higher onboarding and training costs.

What both scenarios have in common is that turnover consumes time – time that could otherwise be spent on development, customers, and business progress.

The Danish Labor Market: Retention Is About the Whole Picture

In the Danish labor market, employees generally have strong opportunities to change jobs. As a result, retention is rarely about compensation alone. Wellbeing, flexibility, leadership quality, and a sense of purpose and development all play a decisive role.

This places greater demands on HR and leadership. Retention is not a one-off initiative, but an ongoing effort that requires insight, oversight, and the ability to act proactively.

When Retention Becomes a Strategic Discipline

The report indicates that organizations with lower turnover work more systematically with development, continuous feedback, and early identification of risk factors.

This requires HR teams to move beyond manual processes and gain access to data and insights that enable them to identify patterns in absence, workload, and engagement – and to intervene before dissatisfaction turns into resignation.

Retention Is an Investment – Not a Cost 

Employee turnover is not an unavoidable cost of doing business. It is a risk that can be reduced. Organizations that take a structured approach to retention and support HR with integrated processes and data are better positioned – not only financially, but also in their ability to build stable teams, develop skills, and support sustainable growth.

Employee turnover is therefore not just about direct expenses, but about total costs that often exceed what can be calculated at first glance. And it is most costly when action is taken only after the employee has already decided to leave.

If you would like to read more about the latest insights from Paychex’s 2026 Priorities for Business Leaders report, you can find it here:
https://www.paychex.com/worx/guide/business-leader-priorities