Effects of High Employee Turnover

Employee turnover is a major concern for companies of all sizes. Understanding the effects of employee turnover can positively impact your business.



How High Employee Turnover Affects Your Business

Employee turnover is a major concern that every company, regardless of size, must address. Whether it's due to budget cuts or employee dissatisfaction, if employee turnover becomes a regular occurrence, it can have serious consequences for your company.

When your employee turnover rate is high, you will feel its effect with reduced productivity and increased time spent recruiting, training, and onboarding new employees. High employee turnover can also lead to a decrease in employee morale, which negatively impacts your company's reputation. 

Here at Stratus HR, we can help you combat the detrimental effects of high employee turnover with. With our advanced turnover tracking technology, expert guidance on retention strategies, and competitive benefits offerings, we empower your business to retain top talent and thrive. Contact us today for a free consultation!

As a business owner, manager, or human resources professional, you need to understand how high turnover impacts your company, as well as steps you can take to remedy the problem. 

1. Loss of Revenue

Losing key employees not only sets you back with time and money spent recruiting, interviewing, hiring, and training a replacement, but it may also impact revenue generated from your client base.

For example, let’s say your best salesperson decides to leave your company and take a new position with one of your competitors. Because they have cultivated meaningful relationships with clients they have serviced overtime at your organization, these clients may follow the employee to their new company, even if it means switching to your competitor. 

This risk is especially detrimental if you do not have a suitable replacement available immediately to take over the departing employee’s responsibilities and keep clients engaged. In the end, high turnover rates impact your ability to generate revenue and can ultimately benefit your competitors.

2. Decrease in Productivity 

According to a HubSpot productivity report, businesses in the United States are susceptible to lost productivity costs of up to $1.8 trillion annually. Although some departures are unavoidable, losing a large number of experienced employees due to voluntary turnover can have a ripple effect on a business. 

The departure of seasoned employees impacts productivity across the organization, especially when vacancies cannot fill as quickly as you would like. When key employees leave, their responsibilities must be transferred to someone else, which frequently results in a shift in resources and a burden on existing staff. The remaining employees may become overwhelmed with an increased workload, which can raise employee stress levels and lead to under-satisfactory work. 

While your employees struggle to juggle an increased workload, productivity takes a backseat as you try to find and train a replacement. This can be a time-consuming and costly process, adding to the already-existing difficulties of employee turnover. 

3. Difficulty Recruiting 

High turnover can harm your company's reputation, which is crucial when it comes to attracting top talent. If your company is perceived as a revolving door, it may be difficult for your HR department to attract qualified candidates. Potential employees may be hesitant to apply or join your team, which can worsen the issue.

People in general make assumptions about companies with high turnover, from dissatisfaction with the work or management, to having a poor company culture. No matter the assumption, struggling to get quality prospective candidates to apply is an indirect cost related to high turnover problems.

4. Low Morale

Increased stress caused by high turnover can make your team feel overworked and burned out. Existing employees may be given additional responsibilities until new employees are hired and up to speed, and even new employees may become disenchanted with the work aura. Overall, this amplifies the downward spiral of poor morale and employees wanting to quit. 

Adding to this concern is employees who become increasingly disengaged and demotivated when their best friend at work decides to leave. When this happens, the employee who is left behind typically becomes distracted, inattentive, and questions whether they should look for a new job themselves.

How to Combat High Employee Turnover

Employee turnover is a critical issue that every business should address. If you know that your turnover rate is high for your industry, here are steps you can take to remedy the problem:

  1. Identify the root causes of your turnover issues. This may include low-quality benefits, onboarding problems, inflexible hours, poor company culture, manager problems, and so on.
  2. Survey your employees about their workplace satisfaction. Find out what frustrations they have, what changes they’d like to see the company make, and what makes them tick for motivation.
  3. Implement new initiatives that will make your workplace a more ideal place to work.
  4. Calculate your turnover regularly to determine whether your initiatives are working. Compare turnover rates by department to ensure it’s not a manager problem that may not have been clear initially.


    Calculate your monthly turnover rate

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    Please note that the turnover rate calculated by this tool is an estimate based on average figures.

    When you outsource to an HR partner like Stratus HR, you gain access to technology that will track your turnover for you, with the ability to drill down to details such as timeframes, seasons, and departments. You’ll also benefit from having your own certified HR expert to guide you with developing retention initiatives, as well as competitive benefits to offer your employees to make you a more attractive employer.

    To learn more about how Stratus HR can help you lower your employee turnover rate, please request a free consultation.

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