How Turnover Negatively Impacts Companies

Employee turnover, or the rate at which employees leave a company and need to be replaced, can have several negative impacts on businesses.

When workers constantly leave a company, it can be costly, from hiring and training new employees to the profit you lose because of the disruption in the workflow.

In addition, a high turnover rate can scare off potential candidates who can bring a load of talent to your company.  

Keep reading for more on how turnover negatively affects companies and what you can do to ensure your employees stay long-term. 

How Harmful Turnover Can Be in a Company 

Employees leave jobs for many reasons. Lack of professional development opportunities, low pay, bad relationships with managers, and a lack of work-life balance are some of the most common. 

Whatever the reason employees are in and out of certain companies, employee turnover can lead to dysfunction in the workplace. The workflow is interrupted, there’s a loss of competitive advantage, they lose valuable employees, and profits decrease. 

Let’s look at each of these in more detail below. 

An Interrupted Workflow 

Every employee has a job to do. And each job in a company matters to its success. They all must work together to complete projects and achieve company goals. 

So, when an employee leaves, it disrupts this workflow. A link in the chain is essentially missing. Until you replace that link, there’s a gap in your workflow that slows everything down. Not only that, if the employee that left was well-liked and a huge contributor to the team, the morale goes down and so does productivity, interrupting the workflow even more. 

Lose a Leg up on the Competition 

Talented employees are one of the biggest reasons a company can compete. Their perspectives, skillsets, and experiences offer a level of problem-solving, innovation, and decision-making that is unmatched. 

When you lose your employees, you lose your leg up on the competition. 

A Loss of Valuable Employees

Losing valuable employees can be detrimental to a team’s morale and workflow. 

Your best employees are the glue that holds the entire team together. They’re your leaders. They inspire the rest of the team to do their best work. 

If you don’t offer anything in your company that makes a talented employee want to stay, they’ll eventually leave. Losing these valuable employees is hardly good for business. 

Decreased Profits  

High employee turnover can delay a lot of things in your workplace, including the implementation of new financial processes and technologies that initiate a financial transformation. 

If you can’t keep employees long-term, you’ll never be as productive as you need to be to even consider a financial transformation. In addition, employee churn doesn’t allow you to settle into a flow of data analysis and data-driven decision-making, slowing down your progress toward finance transformation goals. 

Your ability to consistently turn a profit suffers tremendously when you can’t elevate your finances with the proper processes and technologies. 

How to Reduce Turnover in Your Company 

With all of the damage employee turnover can cause in mind, you’re probably wondering how to actively reduce it. The first step is committing to an ongoing effort to make your workplace the best it can be for your employees. 

Then, move into specifics, starting with creating a company culture top talent wants to stay in. 

Create a Company Culture Top Talent Wants to Stay in 

Talented employees are looking for a specific role that accommodates their personal and professional needs. More importantly, they’re looking for a company with a culture that aligns with who they are and how they want to work. 

It’s up to you to create a company culture employees never want to leave. Start with the leaders you hire. Ensure they genuinely care about your employees and inspire the best in them. Look for specific qualities in the hiring process, like authenticity and exceptional listening skills. 

Aside from great leaders, your company culture should be inherently positive. Encourage employees to be creative and open-minded. Ensure communication and collaboration are at the core of the culture. Give each person meaningful work and challenge them. Build a team of personalities that mesh.

You should also focus on assembling a diverse and inclusive team. 

Build a Diverse and Inclusive Team 

No one wants to work at a company where they’re the outcast, or in a place with cliques that don’t care for new employees. 

You want everyone, no matter their background, abilities, or experience, to feel welcome on your team. When people can be their authentic selves in the workplace, they’re more inclined to perform well. 

Whenever you’re hiring for an open position, purposely look for candidates that others may not be looking at. Interview and hire those living with disabilities, of various racial and ethnic backgrounds, and with a range of skills and unconventional experiences that would add depth to your team. 

Prioritize Employee Development 

A lack of professional development opportunities is a big reason for employees leaving companies in droves. Having a real plan for each person's growth will set you apart and aid your employee retention efforts.  

They’ll want to stay if they know they’re going to develop and eventually land their dream role in your company. 

Sit down with each employee when they start working for you and discuss a professional development plan. Let them tell you where they want to go and work together to create a plan for making that happen. 

Make sure you’re following up at designated stages in their development plan so that they stay on track. As your employees grow, their loyalty to your company will too. And that, in turn, leads to a thriving operation.