An illustrative calculation of the cost of staff turnover for a Saudi company, covering visas, recruitment, lost productivity and Nitaqat effects.
Turnover costs more in the Kingdom than salary comparisons suggest, because each departure repeats visa, recruitment, insurance and onboarding costs, and a departing Saudi employee can move the company's Nitaqat position. The example below uses illustrative figures in SAR to show how to measure the cost of one departure, and what that means for retention spending.
The situation
A 30-person company loses a mid-level expatriate engineer and a Saudi account manager in the same quarter. It wants to know what the departures cost, to decide whether a retention programme is worth funding. All figures are illustrative.
Assumptions (illustrative)
- Engineer replacement: recruitment fee SAR 15,000; visa, iqama and related charges SAR 10,000.
- Engineer vacancy: 2 months, with lost margin assumed at SAR 12,000 per month.
- Engineer onboarding: 2 months at 50% productivity, on a monthly cost of SAR 16,000.
- Account manager replacement: advertising and interviews SAR 5,000.
- Account manager vacancy: 1.5 months, with lost margin assumed at SAR 20,000 per month.
- Account manager onboarding: 3 months at 50% productivity, on a monthly cost of SAR 14,000.
Step 1: Engineer direct replacement cost
15,000 + 10,000 = SAR 25,000.
Expatriate replacements repeat government charges that were already paid for the previous engineer.
Step 2: Engineer vacancy and onboarding
Vacancy 2 x 12,000 = 24,000. Onboarding 2 x 16,000 x 50% = 16,000. Total = 40,000.
Lost output is larger than the direct costs.
Step 3: Engineer total
25,000 + 40,000 = SAR 65,000.
About four months of the engineer monthly cost.
Step 4: Account manager total
5,000 + (1.5 x 20,000 = 30,000) + (3 x 14,000 x 50% = 21,000) = SAR 56,000.
No visa costs, but the lost sales margin during the vacancy dominates.
Step 5: Both departures
65,000 + 56,000 = SAR 121,000.
Two departures in one quarter cost the company SAR 121,000 in this example.
Step 6: Retention budget comparison
If a retention programme costing SAR 60,000 a year prevented one such departure, it would save roughly 56,000 to 65,000, close to or above its cost.
Preventing two departures a year would make the programme clearly worthwhile.
What changes the answer
- If the Saudi departure pushes the company into a lower Nitaqat band, visa restrictions can add costs well beyond this example.
- Longer vacancies for scarce skills raise the cost sharply.
- Recruitment from inside the Kingdom through transfer can reduce visa costs.
- End-of-service paid at departure is a cash cost, though it was already accrued.
- Knowledge lost with a long-serving employee is not captured here.
What the numbers tell you
- Measure the full cost of each departure, not only recruitment fees.
- Treat Saudi retention as a Nitaqat risk as well as a cost.
- Invest in management quality, career paths and fair pay, which drive most retention.
- Review exit reasons each quarter and act on patterns.
Limits of this example
Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.
Domira works with foreign investors on the property side of entering Saudi Arabia: finding land or premises, due diligence, design, construction and asset management. For licensing, tax and legal steps, work with a licensed adviser; we coordinate with yours so the property decision fits the structure you choose.
Frequently Asked Questions
Why do employees leave companies in Saudi Arabia?
Common reasons include better pay elsewhere, limited career progression, poor management, and, since the 2021 reforms, easier mobility for expatriate workers between employers. For Saudi professionals, strong demand from growing sectors creates many alternatives. Exit interviews and pay benchmarking show which reasons apply in your company.
How can I retain Saudi employees?
Offer real responsibility, visible career paths, training, fair and competitive pay and a respectful workplace. Many Saudi professionals value development and recognition as much as salary. HRDF programmes can support training costs. Track retention by manager, since poor management is often the root cause.
Can an employer stop an expat employee from leaving for another job?
Since the 2021 labour reforms, expatriate workers can transfer to another employer without consent in defined situations, such as at the end of the contract, subject to notice and other conditions. Contracts can include lawful terms, but employers should rely on retention rather than restrictions to keep good staff.
Are non-compete clauses enforceable in Saudi Arabia?
The Labour Law allows restrictive covenants on competition or disclosure after employment only within limits, such as a defined period, place and type of work, and in writing. Broad or open-ended restrictions are less likely to be upheld. Have a lawyer draft them for the specific role, and remember that a clause does not replace good pay and management as a retention tool.
Have a Property Question?
Domira can help you navigate property, financing and investment decisions in Saudi Arabia. Speak with our team for an initial consultation.
