The Hidden Costs of High Turnover: Understanding the True Impact on Your Business

Managing teams can be hard. Everyone brings their own skillset and personalities to the table, and it’s challenging to get the best out of the team as a whole while still keeping everyone motivated to show up each and every day. And while the bulk of the leadership and managers that I’ve worked with have been stellar, there have been a few who seemed to have gotten in the habit of accepting a short employee turn-around. Some of them have come to see it as industry standard or a normal aspect of their role — that is until we sit down and I show them the actual cost of maintaining a rotating door of employees.

High employee turnover is one of the biggest problems that businesses face today.

It can lead to a loss of productivity, decreased morale, and higher costs. Many businesses underestimate just how much it can impact their bottom line. In this blog post, we'll take a closer look at the cost of high turnover and why it's essential for business owners to take steps to reduce it.

1. Recruitment Costs
   When an employee leaves a company, it means that the business must begin the recruitment process all over again. This process can be costly, and the cost of recruitment can quickly add up. Businesses need to spend money on advertising, job postings, and other expenses associated with finding new employees. Furthermore, the time spent by HR staff to screen, interview and onboard new hires is a significant cost to the company.
   

2. Training Costs
   Once new employees are hired, they need to be trained. This process can be time-consuming and costly, and the more turnover a business has, the more money it will need to spend on training. Additionally, the more specialized the job role, the more expensive the training may be.
   

3. Lost Productivity
   When an employee leaves, it often takes time to find a replacement, which can result in a loss of productivity. This loss can be significant, and it can be difficult to quantify. However, studies have shown that it can take up to six months for a new employee to become fully productive. During this time, the business may experience a decrease in output, which can lead to lost revenue.
   

4. Employee Morale
   High turnover can have a negative impact on employee morale. When employees see their colleagues leaving, it can create a sense of instability and uncertainty. Furthermore, if the reasons for the high turnover are not addressed, it can lead to low morale, decreased motivation, and even resentment towards the company. And one resentment sets in, it’s REALLY hard to come back.
   

5. Customer Experience
   Lastly, high turnover can negatively impact the customer experience. When employees leave, it can disrupt the relationship that the customer has built with the business. This can lead to a decrease in customer satisfaction, which can have long-term effects on the business.

So you see, high employee turnover can be costly for businesses, both in terms of time and actual money. Business owners and managers should take steps to reduce turnover, such as improving employee engagement, providing competitive compensation and benefits, and creating a positive work environment. In next week’s blog post, we’ll talk about best practices for retaining top talent and avoiding the turnover before it starts.