There are always costs associated with employees leaving a company. Every company, assuming it is around for long enough, inevitably has to deal with this issue. Final payouts, recruiter fees, and a loss of domain knowledge are the most obvious costs associated with losing employees. However, there are hidden costs involved related to time, morale, and opportunity.
Time is an underrated cost when losing an employee. It takes time to find, interview, and train a replacement. That is time which would have otherwise been spent on implementing a killer new feature, paying down technical debt, or designing the next iteration of the product. Instead, the team has to spend time learning how to integrate a new individual and find a new tempo of operations.
Team morale is one of the trickier things to gauge. It can't be quantified, yet a good leader knows when there is something lacking in the team. Any time a company loses an employee, there is an impact on the remaining team members. Depending on how the team felt about the particular employee that is leaving, this impact can be relatively minor or it can be catastrophic. In the worst possible case, the departure of a key employee could result in an avalanche of departures. At the very least, the remaining team members may have a lack of focus for a while as they adjust to the shock.
Opportunity is, in a way, the culmination of the previously mentioned costs as well as perhaps the most deadly. Companies must continue to produce time and time again if they want to survive in an increasingly competitive world. When an employee leaves, there is a danger that the company will miss out on opportunities that it might have otherwise had. Whether that is because 'knowledge walked out the door' or the team is distracted/unfocused, the end result is the same: missed opportunities to become more competitive or increase business.
Folks, the best way to avoid losing employees is to keep them happy. You can do this by making sure that you treat your employees well, give them challenging and satisfying work, and ensuring that compensation is never a problem. An excellent team is, of course, an essential part of a successful business. Lose your team, lose your business.