Effects of high staff turnover on business | Staff turnover

This is the second post in our series on high employee turnover, examining the effects it can have on a business. Learn how to spot the negative effects of a high staff turnover. Can there also be positive effects to employee turnover? To get access to a downloadable version of the whole guide, click the image below:

What is staff turnover?

Staff turnover refers to how many employees leave your organisation and need replacing within a given time period. The more staff that leave within that period, the higher your turnover rate will be. Here we'll have a look at some of the effects of high staff turnover rates - and also low turnover rates - on organisations.

The negative effects of high staff turnover

The negative effects of high employee turnover can range from the immediate and obvious to the more long-term and subtle. In the short-term, leavers can cause gaps in your staffing and the headaches associated with recruitment. In the long-term, a high turnover rate within your business may indicate to current staff and job-seekers that you’re not the best choice for them, affecting your prospects.

Here are some of the negative effects that a high turnover rate can contribute to in more depth:

1. The cost of high staff turnover

Replacing staff is an expensive process for businesses. According to an Oxford Economics study from 2014, replacing an employee costs an average of £30,614 per employee. This includes costs such as recruitment and hiring, training, and waiting for new starters to be up to maximum productivity. From this perspective, lowering staff turnover can save you quite a bit of money.

2. Access to company and brand knowledge

When a new person joins a business, people with more experience can show them the ropes. Senior staff can help them learn about unique aspects of the company, the role, and your brand. If turnover rate is high, new employees have less access to this knowledge and spend more time learning or even starting from scratch.

3. Quality and productivity

With gaps in staffing and new staff needing time to learn, the quality of your products or services can suffer. Remaining staff may also take the strain of a bigger workload, causing stress and drops in quality at the expense of productivity or vice versa.

4. Morale

When employees are leaving your organisation, this can cause other staff members to feel demoralised and even become more likely to leave themselves. Addressing the issues causing turnover rate in your organisation is crucial for avoiding this knock-on effect.

The positive effects of high employee turnover...?

It’s not all bad if you have a higher rate of turnover than you’d like! In an interesting article from Chron.com, they list a few positive effects of employee turnover, such as the potential to lose a toxic employee, getting fresh ideas from new starters, and benefiting from more diverse hiring strategies. So, it's also possible to have a positive turnover rate.

Having a low staff turnover rate

On the flip-side, having a staff turnover rate that's too low can also have a negative impact on a business. A lack of leavers can mean there are few chances for staff in junior positions to progress. Having the same employees for many years without a gradual income of new starters can also impact on the natural transfer of company knowledge from employee to employee.

This is why businesses talk about having a healthy turnover rate; this doesn't necessarily mean a low one. On either side of the equation, a business can have an unhealthy turnover rate, though the effects of a high turnover rate may seem more obvious.

The reasons behind high employee turnover

So, now you have an overview of the effects of high employee turnover – but what about the causes? It’s through examining the causes that we can understand and hopefully reduce the negative effects of staff turnover. Check out our post on the reasons for high staff turnover to find out how to address this.

You can also download our full staff turnover guide.

Looking for a better way to manage your staff? For a full suite of staff management features that help with scenarios such as leavers and turnover, head over to the staff management features page of myhrtoolkit.