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Why Employee Turnover is Also Bad For Your Employees

Turnover has obvious impacts on your organization, like increased reliance on recruiting or lost productivity. The impact turnover has on a business owner has been covered a number of times. But, a less obvious inclusion in the cost of employee turnover might be the emotion implications employee turnover has on your workforce.

This hidden aspect can affect the workplace, and the true cost of employee turnover, in a number of ways.


1. Convoluted mission

A mission statement defines what an organization is. The core of why it exists, its reason for being. It’s the guiding light to keep the c-suite, managers and staff on the same page and constantly working toward the same belief.

While the connection may not be immediately clear, work ethic, professionalism, and teamwork are all the core components that keep us on track. High turnover hinders these components and makes the mission cloudy.

With high turnover, and the constant need to hire and train new employees, it is easy to veer from the  true mission and vision of the organization. High turnover means the focus of your business shifts from productivity to staffing. It can make your employees ask what’s truly important. Are your values strong?

A strong work culture, with minimized turnover, can help streamline, clarify and support the mission.


2. Lower energy at work

Actively disengaged employees - who are highly likely to quit - can be toxic to your work environment in the months and weeks leading up to their departure.

Not only are they dissatisfied at work, but they are vocal about their dissatisfaction to other employees. This negativity can impact workplace morale. Otherwise engaged employees may start to lose their faith and loyalty to your organization.

According to Gallup’s annual study on disengaged employees, there are two types of employees to be hyper-aware of.

Not engaged employees are essentially "checked out." They sleepwalk through their workday. They put the time in, but not energy or passion. Still, it’s possible to re-engage this group of employees and mitigate the damage their lack of energy has caused.


On the other hand, actively disengaged employees are more than unhappy at work. They make their unhappiness known, too. Everyday, these workers undermine what their engaged co-workers accomplish. About 17% of the American workforce is considered actively disengaged. These are the employees who are most toxic at work and will continue to increase turnover at your organization.


It can lessen turnover if you can either re-engage or strategically let go of employees who start to lose engagement at work.


3. Decreased quality of your product

This is a multi-pronged issue. First, it’s jarring to your product development when key players leave. Everyone has a unique workflow. When one person on the team leaves, it takes time for people to learn how to work together, communicate product changes or improvements, and get back into a productive workflow. Each time there is a kink in the product process, it diminishes the quality of the end goal - at least temporarily.

Additionally, training new hires is only a fraction of the education. Long-time employees have a deep history with your company, filled with important information that helps them do their jobs better. Years of “on-the-job training” allow employees to independently problem solve when complex problems arise. When turnover happens, you’re not just losing an employee - you’re losing the years of experience that person had. These knowledge gaps can be hard to fill, and your product can take a hit as a result.

When a product’s value decreases, customers notice. Organizations with high turnover tend to have lower than average customer satisfaction and loyalty. This negativity from customers is often handled by your employees, which can put stress and frustration into your workspace.


4. Revenue declines affect employee treatment

Employee turnover is costly. In fact, the cost of turnover for non-exempt employees can be up to 50% of their annual salary ─ rising up to 150% of an exempt employee’s salary. If your turnover is high, the money to fund attrition needs to come from somewhere.

Without properly budgeting for turnover, it can decrease the ability to treat your employees to culture-focused perks or rewards. A decreased “fun budget” can start to lower morale at your company.

If decreasing your culture budget is unavoidable, are there ways you can still focus on company culture without spending an exorbitant amount of money? There are free perks that can improve your employees’ wellness. For instance, see the strategy Walmart just deployed to limit their turnover and how it can apply to you.

What causes employee turnover?

Above all, it’s important for you to identify the problems and rectify turnover if it’s a problem at your organization.

To ensure your work environment stays happy and productive, further your understanding of what causes employee turnover. Check out an article we recently wrote about the ‘5 Reasons Why Your Employees Quit’. Or, refer to ‘Is Employee Turnover Preventable?’ to find action steps for decreasing employee turnover at your company.


Written by Megan Wells

Megan Wells is a data journalist and content strategist based in San Francisco, California. Wells' work has appeared on Fox, Nasdaq, MSN, Motley Fool, and more. Wells also spoke at the 2015 Exceptional Women In Publishing conference.

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