AMB Performance Group Blog
Disadvantages of High Employee Turnover
Constant turnover at work is more than a nuisance or an inconvenience. It is a one trillion dollar per year problem in the United States. The cost of replacing an employee can be as high as 1.5 to 2 times their salary when you include resources spent advertising the position, screening applicants, interviewing candidates, conducting background checks, and onboarding the new hire. Further, it takes them a year or two to get fully up to speed. (That’s if they stay. And that’s a big if.) The disadvantages of high employee turnover, though, go beyond the bottom line. It can erode company culture, productivity, and morale while impacting your team’s ability to do what they should be doing best: serving your customers/clients. The good news, though? This is a fixable problem.
5 Disadvantages of High Employee Turnover
How does constant turnover at work impact organizations – and the employees who remain?
This is an understatement! As mentioned, the cost of replacing one employee is staggering. At the low end (i.e. when replacing an entry-level hourly worker, for example) you are looking at thousands of dollars. As the person’s role and responsibilities grow, so too does the expense. Tens of thousands of dollars, or more for high-level employees, is diverted away from business operations and investment in the future; instead, you’re spending money to keep your head above water, so to speak.
Constant turnover at work = low morale. There are various reasons for this. One, the remaining employees may have to take on the responsibilities of the departing person. This can lead to overwork and burnout, which in turn, can lead to more turnover.
Another factor is social relationships. Forming connections at work is critical in job satisfaction and happiness with an organization. When we lack these workplace friendships, we don’t feel the same sense of community or belonging. Why get invested, your people may think, if I’m just going to have someone new sitting across from me next month (again)?
Reduced Productivity and Quality
Turnover throws a wrench into the workings of your company; there will inevitably be gaps in continuity as people leave, others scramble to cover, and leaders are pulled away to take over responsibilities and/or train someone new in these roles. At the same time, people’s mindsets may be affected as well. As mentioned, low morale and levels of job satisfaction go hand in hand with turnover. When you’re not running at full speed, you can’t get as much done – and the quality will be lower.
Putting Out Fires
When you are dealing with high employee turnover, you are also losing experience and knowledge. This may leave gaps that put your organization at risk. Instead of proactively planning for, and investing in, the future, you are putting out fires. In other words, you’re just trying to make it through the day in one piece! Obviously, building a thriving business is a challenge in these conditions. To say the least.
When you have new people constantly, customer relationships may suffer. This is not to say new hires are not invaluable resources for your company, but there is most certainly a learning curve. Some customers may not be willing to take that journey with you. They may be turned off by inexperienced employees.
Further, if your company has a reputation for being unable to retain quality workers, your image with customers takes a significant hit. It becomes even more difficult to find and keep the people you need to move your business forward.
High Levels of Turnover Are Not Inevitable
According to a Gallup poll, over half (52%) of employees who choose to leave their workplace say that their organization or manager could have taken action to prevent them from going. Again, over half (51%) report that neither their manager nor anyone in authority spoke with them concerning satisfaction or their future with the company. As Gallup puts it:
“In three months, nobody asked them how they felt about their job. Nobody talked about their future. So it makes sense that they decided they didn’t have one there.”
Could a simple conversation – or a series of ongoing conversations – really make a difference in stemming the tide of constant turnover at work? While other factors play a large role in retention (i.e. compensation, perks, flexibility, etc.), people want to work in an atmosphere that is connected, supportive, and offers opportunities for growth and development.
Talk to your people. What’s going on? How’s work? What’s frustrating them? What are their goals? Their hopes for the future?
Fight Constant Turnover at Work
The disadvantages of high employee turnover are clear, and they may be keeping your organization from performing at the level it should be – that it can be when you have a talented team in place. To learn how to develop and implement an employee retention plan, contact AMB Performance Group.