HR Corner: The 7 Major Cost of High Employee Turnover

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by Natassia Wright – Mind Food International

KINGSTON, Jamaica – “Oh no! Not a another resignation!” Have you ever seen great and talented employees walk through the door, one behind the other, almost in an exodus manner through voluntary separation. These may have been key employees who were loyal, productive, trustworthy and contributed 80 percent of the organization’s productivity. Any organization that loses its employees at an alarming rate point to deeper issues within the organization culture and system, if the hemorrhaging of employees doesn’t stop that organization will never maximize its potential and may lose its market share.

High turnover may be viewed as a significant number of employees leaving a company within a particular period of time and that may exceed the industry benchmark. It is true that we are currently operating in an unprecedented era of the workforce, COVID 19 changed the world forever and now employees have a renewed outlook on their careers. Professionals are migrating, switching career paths and giving up their professions in general in search of their best fit or finding the best value-added opportunity. There are many factors influencing the severe shift in the way professionals operate today, however the reduction in staff count has an impact on the organization’s bottom line.

Cost of High Employee Turnover

The true cost of high turnover isn’t just about money, when key employees resign an organization is losing productivity, experience, relationship, high morale and in some case customer or clients may follow key employees. High turnover is a major source of frustration due to the following:

Productivity

When an employee walks through the door, that organization has just lost productivity. Who will work or who will that project go to? And it can even be a more frustrating task if a specialist went through the door. In some cases, another employee will have to pick up that project until a replacement is found. If a manager resigns, new signatories or team leads will have to be appointed. We can only hope there is some succession in place to make this process smoother.

Depleted Employee Morale

A team member’s departure can be a significant blow to employee morale, as losing a friend and colleague leaves a hole in the team dynamic. On top of that, employees may begin to look for problems; if someone they trust and respect decides to leave, should they consider it, too?

For some employees, losing a teammate and or team leaders increases frustration, resentment and burnout, and can prompt them to question whether they, too, should be looking for a new opportunity. These once empowered staff members begin to question their reasons for loyalty.

Recruitment Process

Statistically, the replacement cost for most employee is between 30% to 400% of that employee’s salary depending on the situation and urgency. It requires HR professionals, whether internal or external, to make this process swift, which results in their other tasks being halted until the recruitment is complete. Expert recruiters come at a pretty penny as well.

Training & Development

There is a learning curve for all positions within your organization. Sure, you may have new recruits that are faster learners, however there are just some things that require time and experience. For some positions it may take years to get the new recruits to the level of the staff that left. Training is crucial in this process, and you guessed it, training is an investment.

Diminished Employer Brand

Being known as a revolving-door employer can severely damage your reputation. Instead of attracting top talent, your open positions may only appeal to low-quality candidates who are not interested in long-term commitments or making a significant impact. These employees can demotivate their colleagues and cause new hires to leave shortly after joining.

More Turnover

Turnover is cyclical. As mentioned above, an employee’s departure impacts the company culture and the workload of their teammates. Overworked and disengaged employees are more prone to burnout, which often results in increased turnover. While some turnover is inevitable across all industries and companies, it is essential to prevent further employee departures.

Deterioration of the Company Culture

One too many resignations will soon have many believe that the culture of the organization is toxic. Although there may be other factors such as change in industry, economic challenges or more, one would believe that the leadership is weak, the compensation is below standards or that the company treats their employees poorly. These assumptions will damage the public image of the company.

The most crucial impact of turnover isn’t the financial cost, but the harm it causes to your remaining team. Your employees are crucial to your business’s success. Without them, current staff must take on additional responsibilities, and your company may have to abandon or delay plans to grow. In essence, a high turnover rate has deeper consequences than it appears. The company’s reputation and future growth is at stake.