Internal and External Impact of High Employee Turnover

A revolving door of employees can have a dramatic impact on an organization. While some industries anticipate employees coming and going and are prepared for it, others struggle with a high level of employee turnover. In the latter case, it is a good idea for management or human resources to take a step back and try to see what might be causing people to have such a short stay in their employment.
 

What factors can contribute to high employee turnover?

One factor found to be a primary contributor to high employee turnover is lack of engagement. According to a study conducted by Dale Carnegie Training and MSW ASR Research, when people become disengaged, they tend to resign from their jobs.

Many different cultural aspects of an organization often factor into high employee turnover. They also may be reasons why employees don't remain engaged. These often include:
 

•  Low morale across the organization or in specific divisions
•  High stress in the working environment
•  Employees not being given any/or enough training
•  Unfair treatment and high expectations
•  Poor working conditions creating a level of unhappiness
•  An overall negative environment where negativity can tend to breed more negativity
   

Some of these issues can be remedied relatively quickly if identified, but others can be harder to fix. This is because those reasons are typically related to ongoing organizational cultural issues that have been neglected and, as a result, festered over time.
 

Once a person checks out emotionally, often he or she moves on and doesn't look back. Engagement matters. Statistics indicate employees who are highly engaged are "38 percent more likely" to show above-average productivity, says the Workplace Research Foundation. It is important for management to identify what's holding good people back from being engaged because, if not, the situation is likely to create additional problems.
 

Internal problems associated with high employee turnover

High employee turnover can lead to many internal problems within an organization, including increased expenses, stressed-out employees and using more resources than there would be with a stable group of workers.

Increased costs associated with hiring

Over time, a continual turn of employees can become costly. Every time a position reopens, organizations must advertise, spend time going through resumes, conduct interviews and then go through the actual hiring process. Think about how much time, effort and money each part of this process takes—over time it will accumulate.

Time-consuming for staff

Recruiting people, interviewing and bringing a person on board takes up staff time. Consider every time a new employee is hired, he or she also needs to be trained. Getting a new team member up to speed takes other employees away from their daily tasks, and this could create a frustrating environment for those being left to deal with the aftermath every time a person quits his or her job. Not to mention, those employees probably have to cover the role until a replacement is found.

Staff cannot perform core competencies

Ultimately, high turnover could have a negative effect on the organization's level of productivity because staff cannot attend to their own jobs when they are constantly training new employees. As a result, the organization's primary mission may be neglected as resources are consistently rerouted to acclimating new staff members.

Lose tacit knowledge

Employees that are only on for a few weeks won't acquire enough knowledge to have a severe impact on an organization, but if the working environment becomes so difficult due to the high turnover, this could begin to affect even long-term employees. If these staff members become frustrated enough to leave, many of them will take a lot of accumulated knowledge with them. Tacit knowledge is difficult to pass on to another person—it comes with time and experience. The loss of this kind of asset can have a huge impact on any organization. Not to mention, these valuable employees can go straight to a competitor's doorstep, bringing their expertise with them.

Most of the above issues can end up creating a lot of stress within the organization's walls and end up having an overall impact on the employees' morale. Decreased morale could have a trickle effect and, over time, begin impacting quantity and quality of work, not to mention breed levels of negativity.
 

External problems associated with high employee turnover

High employee turnover has a significant impact internally within the organization but can also lead to external problems. In time, these too can affect being able to meet organizational goals and retain healthy levels of productivity.

Reputation:

A brand's reputation is one of its biggest assets. If consumers and B2Bs notice high turnover, they might begin to wonder if there are problems within the organization and, as a result, begin to worry about quality.

Unhappy customers or clients

This goes back to productivity. If employees are too busy training people, and the work is not getting done, this could lead to numerous issues—particularly if products or services are not being delivered in a timely and quality-driven fashion. Unhappy customers or clients may start turning to competitors who can better meet their needs. Or, in the case of public agencies, may create bad publicity.

Dwindling applicant pool

If an organization's reputation reaches low levels, the pool of good candidates may begin to shrink. Job seekers are more likely to shy away from employers who can't retain good people for very long. Also, these are the people who are most likely highly motivated, eager and productive—in other words, the people with the best attributes and work ethic.

A global study published by Woohoo Inc. found nearly two of every three employees have "at least one bad day at work every single week."  It's probably a safe bet many of these people end up leaving their jobs if the opportunity arises. Out of the 700 people surveyed, just a mere eight percent "never or almost never" have a bad day. If this study is any indicator, employers that are experiencing high turnover should dig deeper to see why their people are so unhappy and then work to correct it.

Organizations that proactively take the time and effort to identify and fix any issues before they turn into even bigger problems are more likely to lower their turnover rates. Even if turnover rates aren't currently high, they might begin to increase if the problems perpetuate. Brushing things under the proverbial rug can, in the long-run, have a negative effect on the organizational mission, its productivity and affect profitability. Unanticipated high turnover is an issue any organization should keep a pulse on before it does create a problem.