Businesses often think of employee turnover as an inevitable part of doing business. After all, it’s hard to keep good employees when you have a high turnover rate. But if your company suffers from a high turnover rate, you’re in trouble. This is especially true for small businesses that don’t have the resources to hire and train new people constantly. Here’s how employee turnover can make or break your business.
1. Poor Brand Imaging
Internal brand imaging is the perception that employees have of their company. It comes from what they see, hear and feel while working there. If employees don’t like their experience at work, they will leave. And when they go, they take this negative impression to the next job. This means that if a company has terrible internal branding, it will have a hard time attracting good talent in the first place.
2. Loss of Human Capital
Turnover is a costly process. It’s estimated that replacing an employee costs as much as $75,000. This includes advertising, interviewing and reviewing resumes, and hiring and training new staff members.
Turnover can impact a company’s bottom line in various ways. For example, it takes time for an organization to fill open positions, which means there will be less output until new employees are trained. Additionally, turnover can lead to decreased productivity and revenue because of increased workloads for those who remain at their jobs after colleagues leave.
3. Financial Loss
According to Employee Benefit News, the average employer spends 33% of an employee’s annual salary just to replace that person. The costs of hiring, training, and retaining new employees are also considerable.
Turnover can lead to various financial costs, including recruitment and training. For example, if an organization loses a salesperson responsible for generating revenue, it must spend money on finding new employees who will replace them. It also may take time for these new employees to be trained and up to speed with their jobs. In addition, turnover can cut into productivity levels because of increased workloads for those who remain at their jobs after colleagues leave.
4. Poor Customer Service
When employees leave their jobs and are replaced by new ones, customers often report a decline in service quality. It takes time for new workers to learn the job, build relationships with other employees and learn how things work in an organization.
When a company experiences high levels of employee turnover, the quality of customer service often declines. Customers become frustrated when they have to deal with new employees unfamiliar with the organization’s policies and procedures or who don’t know how to answer questions or fulfill orders correctly.
If customers have to deal with multiple employees in a single interaction, they may experience longer wait times and less-than-ideal service. Customers also may feel frustrated when they have to deal with the same issue over and over again because different employees don’t seem to be able to resolve it.
5. More Turnover
Employee turnover can have a snowball effect on a company. When employees leave, it often creates a domino effect, causing others to leave as well. This is because employees often leave due to a negative work environment, which is often caused or exacerbated by high turnover rates. When new people are constantly coming and going, it’s difficult for everyone to feel settled and comfortable in their roles. This can lead to tension and unhappiness among employees, which can then lead to even more turnover.
Employee satisfaction is the number one cause of low staff turnover. When employees feel valued and appreciated, they are more likely to stay with a company. This means that companies must focus on creating an environment where employees feel respected, safe, and supported. Companies can best do this by supporting their well-being through practices such as workplace wellness programs. Other practices are also helpful, such as flexible work schedules and opportunities for career advancement.
Additionally, companies should conduct facilitative leadership training for managers to ensure they are equipped to create a positive work environment. With a positive work environment, good talent will want to stay with a company, and the company will have low staff turnover. Essentially, companies that invest in their employees are more likely to have a higher retention rate.
Key Takeaways
It’s important that you understand the impact that employee turnover can have on your business. A high turnover rate can be costly and disruptive, especially if you don’t have a plan in place to deal with it. This is why it’s important to develop a retention strategy. A retention strategy can help you retain your best employees and prevent turnover from happening in the first place.
