A study published by the FiMT, which campaigns to help former military personnel cope with the return to civilian life, said "poor transition" takes its toll, often leading to alcohol abuse, mental illness and family breakdown.
The report found the transition for ex-military personnel costs the taxpayer £113.8 million a year.
Earlier this year ministers said they wanted to reduce the number of full-time forces personnel from 102,000 to 82,000 by 2018.
In the last round of redundancies in June 4,480 soldiers were handed notice.
FiMT's chief executive Ray Lock said the Ministry of Defence has done a lot to ensure people coming out of the services have employment opportunities, but said employers need to take some responsibility as well.
"If more employers look at ex-military personnel for their potential employees, then they will often find a quality individual with business-ready skills and excellent leadership traits," Lock told HR magazine.
Lock said some employers may look to the military for potential talent but engaging with the service would also be used as part of a CSR programme.
Services culture
The report found there are strong differences between cultures in the services.
It said the non-military workplace there is a good balance of gender but the military world is strongly dominated by men.
The report found the military remains a closed world, with its own languages and behaviours, which are not appropriate in non-military employment.
These differences can comes as a surprise to service leavers. It also found financial demands of civilian life can come as a shock.
"What employers need to realise is service leaders may have a lack of soft skills but are extremely adaptable. They will pick up these skills quickly and employers shouldn't view this as an issue," said Lock.
