Employee Turnover: What It Is and Why It Matters for Your Business

Employee Turnover

Employee turnover is a commonly talked about but often misunderstood subject. It’s an indicator of how often staff leave or are replaced and can have a considerable impact on the success of your business. Understanding precisely what employee turnover is and how it works is critical to maintaining workplace satisfaction levels.

What Is Employee Turnover?

Employee turnover is the rate at which employees leave accompany and need to be replaced. A high employee turnover is an indicator that something in your workplace needs improving because people are either not happy, not engaged, or unable to reach their potential. For instance, Workhuman defines employee turnover as the workers who part ways with the organization they work for. Employee turnover can be either voluntary, which is when employees choose to move because they want a higher salary or more benefits etc. Conversely, it can be involuntary or forced. The reasons for forced turnover are myriad and can range from a toxic environment to bad hiring practices (i.e., hiring someone who cannot handle the job demands). Regardless of why people leave, employee turnover has severe financial and functional repercussions for businesses that need to recruit and train new hires whenever an employee leaves.

What Is Employee Turnover

High Employee Turnover Can Be Costly For Businesses

There are numerous reasons why a high turnover rate can negatively impact business operations, including the following:

  • Recruiting: Finding new staff is a labor-intensive task and requires a keen understanding of how to find individuals who will fit into a company. Most businesses will have a dedicated HR department to carry out this task, but smaller operations will need to think outside the box to get the very best.
  • Hiring: Once you’ve found a pool of applicants capable of working with you, you need to set up processes regarding contracts and other pertinent documents to ensure everything is above board.
  • Training: This is arguably the most critical aspect of hiring new staff and can sometimes involve taking other employees off their tasks to train the new hire.
  • Onboarding: Once you are happy and the new hire has passed their probationary period, you will have to onboard them. This means setting them up with your systems and solutions, including creating business accounts, passwords, etc.
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As you can see, this process takes time and a lot of effort, which is why it’s imperative to retain your staff in the first place.

Employee Turnover Can Also Negatively Impact Company Morale

Employee turnover can also have a significant negative impact on employee morale. Employees’ workload must often be redistributed to other team members when they leave. Team members who are dealing with increased responsibility can become extremely frustrated and resentful if they don’t feel that their efforts are being suitably compensated or appreciated. This can lead to an overall decrease in office morale and team cohesion, which, in turn, affects a company’s performance.

Employee turnover is a natural part of any business, but it can severely impact your operations when it becomes too high or occurs for the wrong reasons. By taking time to understand the causes, you can reduce the rate and dramatically improve your workplace.

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