Employee turnover is the rate at which employees leave your organization. Your turnover rate can be an indicator of a problem, but your turnover cost is the real number you need to calculate. So, when is employee turnover a problem? The quick answer: when it costs you money – and most turnover does.

Turnover can be extremely expensive, but it’s not a number defined on your P&L. Add up the cost of experience lost, productivity lost, reduction in morale, payout of PTO or severance, the time a position remains unfilled, recruiting and hiring costs, onboarding and training time and expenses. Then multiply that number times the number of employees lost during that period. Those numbers are not always easy to calculate, but you can get the general idea that turnover can be costly.

On the other hand, some turnover is a net gain. When you have a person costing you money, the sooner you address that, the better. If you have an unproductive employee, for example, or a toxic employee, you are probably losing money you don’t even realize, and faster than you realize. That unproductive employee? Other employees are usually very aware of what’s going on, and frequently, their productivity tapers off because you’ve allowed this person to keep working for you with their bad habits. And the toxic employee? You’ve probably already lost people (and money), and maybe customers (more money), because of them.

One estimate from the Center for American Progress (CAP) is that the cost of replacement for highly-skilled employees averages over twice their annual salary.