Most experts agree that the cost of hiring the wrong employee is one (1) to two (2) times the annual salary of the employee.

According to Kepner-Tregoe's 'Avoiding the Brain Drain': "The loss of high performers costs more than money. It tends to impair the organization's memory, dilutes the ability to perform, and compromises the will to win."

The Society for Human Resource Management (SHRM) has reported findings by the Saratoga Institute in Santa Clara, California, that the average cost of replacing an employee is equal to their annual salary plus benefits.

However, the Saratoga Institute Turnover Costing Model puts direct costs as being:

Cost of termination (including any pay out arrangements);
Cost of hiring (including advertising expenses, recruitment consultant's fees);
Cost of the new hire (only 60% as effective in the first 3 months compared to an experienced employee).

In short, estimates of turnover cost range between 1 to 2 times an employee's annual salary and benefits.

According to Harvard Business Online: "Replacing an employee is estimated to cost twice the departee's annual salary."