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The Impact of High Employee Turnover?

October 27, 2022

It typically costs six to nine months of an employee’s salary to replace them — meaning that losing that middle manager who is paid $60k a year could result in a hit of $30k. Yet as shocking as this might sound, it only skims the surface of the potential impact high turnover has.

If you’ve noticed your organization is experiencing this problem and you’re wondering how much of an issue it really is or what you should do about it, you’re in the right place.

The impact of high turnover

As mentioned, the surface level impact of high turnover is that it affects your bottom line. Yet this happens through multiple channels, and many business owners or managers don’t realize how harmful it can be. Here’s what you need to look out for.

The cost of hiring and onboarding

First of all, there are the costs of interviewing someone — around $4,000 per hire. In most cases, it may take a month or more to find the right person (although there’s some variation between industries), with it taking 41 days to fill a position on average.

On one hand, this means lower output during those 41 days, which hurts revenue. But it also means that crucial time and resources are spent on making that hire. Often, other team members will have to spend hours wading through resumes or conducting interviews instead of doing their usual work. The problem isn’t much better if you outsource the task, since you’ll have to hire a recruiter and pay their fees (and most leaders want to be somewhat involved in the process anyway).

Reduced productivity and quality

All of this can result in lost productivity and a decrease in product or service quality. Inexperienced or overworked staff means worse customer experience and more errors related to products or software, resulting in customers getting frustrated and going somewhere else for the product or service.

Worse, the problem persists even after a hire is made. It takes time to onboard and train a new employee to reach the standard of performing their job effectively and positively impacting the organization. All this progress is lost when you have to hire somebody new and start afresh.

Poor morale and workplace culture

A knock-on effect of this can be that remaining employees feel unhappy. They have to pick up the slack, meaning they might have to do two peoples’ jobs or put in overtime, making them feel resentful. All of this hurts morale and deteriorates workplace culture, which can then be contagious even for new hires.

As you can probably see by now, this can create a vicious cycle where high turnover makes employees less happy with their jobs, encouraging them to quit and worsening the turnover problem. Every new hire compromises the process and your customers’ experience because each new hire is putting their own spin on things.

But enough with the negativity. What can you do about it?

How to reduce high turnover

Unless you’re incredibly lucky, employees will inevitably leave your organization from time to time. Maybe they’ll want to move to a different city, quit work to become a full-time parent, or even retire — never mind those looking for a career change. And no matter how well you treat your employees or how many perks you offer, that isn’t going to change. However, if you find that you can’t make anyone stick around for more than a year or two, it looks like you might have a problem on your hands.

In that case, your first port of call should be identifying the problem. Common causes of employee turnover include:

  • Stress – a difficult job is a stressful job.

  • Low job or work satisfaction – not allowing your team to do stimulating work.

  • Poor leadership – Leaders need to continue to work on their skills as a leader.

  • Unsatisfactory compensation – paying below market rate or someone’s value.

  • Disagreements with coworkers – sometimes we call this tribe vibe where there is one person singled out from the pack.

  • Toxic workplace culture – this can show up in many forms.

  • Boring job role- the right people in the wrong roles or underutilizing your people.

You can try strategies like sending out an anonymous survey to your team asking for their honest opinions on all of the above. And make sure you act on the feedback too —after they take the survey they want action, inaction will feel like empty calories and will work against you.

In some cases, the problem might be taking place at the hiring stage, so it’s worth analyzing your strategy further to check your job descriptions are accurate, your interview process is fair, and you’re advertising in the right place.

Sometimes, it can be hard to look at all of this impartially and figure out where things are going wrong, in which case it might be time to bring in a consultant to look at your processes and organization through new eyes.

Tackle that turnover rate

If you’re trapped in the cycle of high turnover, it can feel like you need to spend all your time and resources on constantly finding new employees, leading you with no time to really examine your processes. To exit this cycle, bringing on a consultant can be a great route to go down.

At Cornerstone Paradigm Consulting, we specialize in analyzing your business processes to identify the root cause of problems. We’ll analyze your people, processes, technology, and customer service to find out why you’re experiencing high turnover — and help you to solve the issue. Get in contact to find out more.