Employee turnover affects your business


What’s the most critical asset to your company? If you answered anything other than “the staff”, now is the time to adjust your approach to ensure long term success. Great employees are the driving force behind any venture, and it’s important to realize that employee turnover affects your business significantly. Turnover is often overlooked and can be a significant liability.

Here’s why you must aim to keep that turnover level at the lowest rate possible, starting right now.

Employees Dictate the Client Experience

Every entrepreneur understands the importance of having a customer-centric operation. However, you cannot expect to provide world-class customer service without a world-class team. Experienced employees learn lessons from their mistakes, ironing out the kinks to offer the best service. When surrounded by a consistent group of colleagues that all embrace excellence, they can pick up tricks and tips from each other too. A settled, tenured team is a happier team too, and those positive vibes and culture pass straight through to clients and reflected in their work.

Institutional Knowledge

The best employees aren’t just blessed with great resumes and wonderful skills. They also have an understanding of the company, the brand, client history, product knowledge, process mastery, client relations, and more. Those attributes can only be gained through experience and time. Unfortunately, a high turnover of staff results in a loss of these valuable assets, which can prevent you from unlocking your true potential and experiencing sustained growth, at greater margins. Similarly, internal promotions mean that senior staff members have an understanding of the junior roles, which can lead to a far better overall situation for your management structure, organizational chart and operations as a whole.


Continuity affects everything from customer care to productivity. A high turnover of staff will disrupt that sense of continuity. A great book on developing transparency with your staff is The Alliance, by LinkedIn founder, Reid Hoffman. New staff won’t do things in the same way, while their lack of past knowledge of the clients can negatively impact the relationship. Given that the services provided are as crucial for your brand image as the products, getting this element wrong simply isn’t an option. So when you have new staff that are pushed on existing clients, you’ve got to tread carefully.

Onboarding, until recently was often overlooked as a key driver for employee success. Recent case studies of top performing organizations point to having a strong and memorable onboarding process as a key ingredient in both short term and long term employee success (and satisfaction.)


Studies on the cost of employee turnover are all over the board. Some studies (such as SHRM) predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that’s $20,000 to $30,000 in recruiting and training expenses.


Appreciating the human needs of your business is essential for the long-term success of your employees, both collectively and individually. Friendships can encourage improved atmospheres, and this is more likely to occur when the team is tenured. High turnover rates don’t only harm morale in this sense, it may also lead to some employees having anxiety with regards to their long term prospect at your firm, leading to job searching while on the job. They’d rather jump before they’re pushed or overlooked.

Career Progression

Most employees, especially younger employees, desire transparency when it comes to career opportunities and a career progression path. Yet many companies don’t provide this, either because they don’t have a plan or because they don’t consider it an important element to employee satisfaction. However, if you want to keep young employees engaged, committed to your mission and productive, it’s wise to invest in this area.


People talk, both clients and employees. A high turnover, along with the associated teething problems of imbedding new staff, can lead to negative reactions. In a world where everyone can have their say on social media, this can create headwinds for your brand in many areas. A poor reputation online with regards to hiring or firing practices can turn away not only future employment candidates, but also future customers that may choose to do business with organizations that boast stronger employee cultures.

Your reputation as an employer, how you treat your staff in both good times and bad, will ultimately shape your company’s long term success.