The real cost of a high staff turnover rate

Kerrie-Anne Chinn, Content & Editorial Manager

While every company experiences staff turnover, when the level reaches too high, it creates an assortment of problems. As a business owner, it’s your responsibility to understand the reasoning behind a high staff turnover rate, the consequences that follow, and the options you have to prevent it from happening.



Keep in mind that employee turnover spares no industry. But according to a LinkedIn article, three in particular struggle the most in retaining qualified workers. At the top of the list are tech companies, those that specialize in software. This industry has a 13.2 percent turnover rate. Next in line are retailers and consumer goods companies with a rate of 13 percent. Coming third are media and entertainment, along with professional services, at 11.4 percent.

Additional industries with the highest staff turnover rate include:

  • Government, education, and not-for-profit organizations – 11.2 percent
  • Insurance and financial services – 10.8 percent
  • Telecommunications– 10.8 percent
  • Energy and oil – 9.7 percent
  • Automotive, transportation, and aerospace – 9.6 percent
  • Healthcare and pharmaceutical – 9.4 percent

Some industries have a higher risk than others. But overall, every business needs to recognize the problem and act quickly to avoid fallout.

Reasons for employee turnover and easy fixes

The first and most important thing you need to do is gain insight into why your employee turnover rate is high. Only then can you address the issue appropriately. One thing important to note is that due to the type of work involved, some industries are naturally more prone to a high staff turnover rate than others. However, even if your company falls within one of those, you still have viable options to correct and control the problem.

While experts have some differing opinions, the majority agree on 10 specific reasons for a high turnover rate. Unfortunately, you can lose excellent employees right along with the bad if any of the following exists within your organization. When assessing your company, be on the lookout for any of these. If identified, consider the remedies provided.

1. Unacceptable behavior

“Office politics” are a huge issue. If you have people working for your company who participate in back-stabbing, gossiping, throwing blame, or being rude to their co-workers, you’ll have a hard time keeping anyone on the payroll. In this case, your HR Director, along with department heads and your L&D Manager need to devise a plan to stop this behavior in its tracks.

2. Work overload

You may have the most dedicated and hard-working employees in the world. But when an imbalance between work and personal life develops, it can force them to leave the company. Regardless if you recently had to downsize or require your staff to put in long hours, you have to make sure your employees do not compromise their life outside of work.

3. No empowerment

One of the best ways to get your staff to perform is by empowering them. That means giving those qualified the opportunity to make decisions. Not only does this give your workers authority, but it also makes them more accountable. Again, you need a system in place whereby your leaders do not micromanage but empower the employees instead.

4. Undervalued

Everyone, regardless of their title or position, wants to feel valued in the workplace. If you don’t have some type of reward system in place, it won’t take long before workers begin to seek other employment. Make sure the leaders within your organization come up with a plan that both recognizes and rewards hard-working employees. 

5. No feedback or mentoring

It’s essential for your managers to provide feedback combined with mentoring to help your employees succeed. If that’s not currently happening, you need to make a change in how you run your business. Honest comments, whether positive or negative, go a long way in prompting people to do more and do better. 

6. Misaligned expectations

Another reason behind a high staff turnover rate has to do with the job not meeting expectations. You probably know that positions can change after onboarding someone. But if the work involved is too far off from what the individual agreed to at the time of hiring, you take the chance of losing that individual as an employee.

For this, your HR Director and your leadership team need to evaluate positions and make adjustments if necessary. As an example, if you hired someone to work closely with customers, but soon after starting the job, that person’s position changed to having little to no direct contact. You can anticipate an unhappy employee.

7. No advancement

Sure, some people spend their entire working career doing the same thing while remaining completely content. However, this is rare.  If you want to avoid a high staff turnover rate, you need to give your staff the opportunity to advance. Workers who see potential for growth are more likely to remain loyal to a company.

8. Company instability

Whether your business is going through a rough patch or rumours have circulated throughout the organization about a possible closing or downsizing, you need to nip this problem in the bud quickly. Instead of keeping your staff in the dark, be transparent. The number of employees willing to stick around through the good and the bad times would surprise you.

9. Inadequate skills

Obviously, the goal when hiring is to select people with the right qualifications. Therefore, be sure you place employees in the right positions. Also, because responsibilities can change, always provide training as needed. For this, your L&D manager can select online training courses that bring your employees up to speed in no time.

10. Promotions and raises

A lot of people accept positions according to promised promotions and raises. If you had to freeze these perks for some reason, and your staff has the chance to work elsewhere for 20 percent more, you can bet your turnover rate will increase. Again, be honest with your employees, so they know you understand their frustration and are doing everything humanly possible to turn the situation around as fast as possible. 

The fallout

Now you understand why most employees leave a company. But to fully appreciate why this is something you want to avoid, take a look at the fallout. No matter what product or service you sell, your staff is your most valuable asset. Even in the age of technology, mega organizations know that success comes from having employees who are satisfied with their jobs.

The problem is a lot of companies focus so much on hiring, as well as product and service development, and they fail to give any serious consideration to employee retention. If you want your business to remain competitive and successful, you have to look at the bigger picture. After all, a high staff turnover rate is expensive in more ways than one.

As a perfect example, People of Greenhouse, led by VP Maia Josebachvili, created a case study that shed some interesting light on workplace turnover. In this study, the team determined that retaining a salesperson for three years, as opposed to two, improving onboarding practices, and enhancing management strategies, yielded a net value difference of $1.3 million to a company over the course of three years. 

This same organization shared some insightful beliefs as to what you should consider for your company. Three things, in particular, stand out, which the People of Greenhouse implemented, including “nurture brilliant and talented employees, encourage employees, and empower employees.”

Some experts go with even higher numbers when estimating the financial loss of staff turnover. For instance, the Center for American Progress published a report that spanned 15 years. In that report, it cited 11 different research papers. The outcome was that a company with a turnover of an extremely skilled worker could cost the business 213 percent of that person’s annual wage.

While other experts have an even more conservative viewpoint, claiming the cost of losing an employee typically ranges from tens of thousands of dollars to up to twice the annual salary of the employee who leaves. It’s still too much. Remember, you invest a lot on your staff, from recruitment and hiring through training and ramp-up to achieve optimum productivity.

The cost of having an employee leave also covers a greater degree of errors, general culture impacts, and a decrease in engagement with others. Think about that for a minute – one employee making $50,000 could cost you as much as $100,000 – just ONE. For a significant turnover rate, the numbers increase dramatically in no time at all. 

Breaking the numbers down, consider a company with 150 employees and a current 11 percent yearly turnover rate. Spending $25,000 on hiring, $10,000 for each turnover, plus development, and roughly $50,000 on productivity opportunity while trying to replace a staff member, that company could easily lose $1.57 million annually on turnovers.

Change your focus

Although workers leave a company due to being underpaid, the number one reason for a problem with turnover has to do with employee dissatisfaction. For that reason, you need to focus your efforts in that direction above all else. Following are the most critical areas that you need to address.


Remember the discussion about career advancement; you need to provide your staff with growth opportunities. Even more than job security and salary, providing your employees with a chance to advance within the organization will significantly decrease your turnover rate.

For example, if you have employees who enhance their skills by taking online training courses or attending a conventional college campus, take advantage of that. By moving that person to a better fitting position, you’d quickly see an improvement in work satisfaction. Also, have your HR Director spend time with your employees to gain an understanding of their long-term career goals.

Concern and care

As human beings, your employees need to know that you as the owner, as well as your entire leadership team, genuinely care about them and have their best interest at heart. By building a workplace culture whereby everyone appreciates and respects others will help reduce your turnover.


You need to consider how an employee impacts your company and the way your company affects the world. In this case, develop a clear mission statement and share it with your entire staff. This will encourage your employees to work through tough times and remain focused on the business priority. In other words, your employees need a clear vision of what they’re striving for and then be recognized for what they do.

Final thoughts

Arm your staff with the tools and resources they need to succeed. If you have a high employee turnover rate, you not only lose financially, but your company’s reputation could also suffer. If potential and existing customers see that you have a lot of employees coming and going, it makes them question your business’ integrity and practices.

At the same time, a high staff turnover rate could give your competitors an edge. Using that to their advantage, they can quickly take some of your customers, which is never a good thing. All in all, it’s imperative that you recognize a problem and take the appropriate action immediately. Otherwise, your company could suffer to the point of failing altogether.

Training opportunities

Always remember to provide your employees with training. At the time of bringing new staff onboard and throughout their career with your organization, make online courses a part of your overall strategy to keep employee morale and productivity up.

Along with your day-to-day workers, you should give your leadership team the same opportunity. For one thing, training enhances skills while introducing your staff to new ones that they can use to better themselves and the company. Also, ongoing training gives people a sense of empowerment and shows that you’re willing to invest in them and their career.

Although you can find an abundance of companies that offer online training, not all have the same caliber of courses available. Go1 has a reputation for providing a broad range of superior quality topics, with courses developed and often presented by industry leaders. For a nominal fee, use training to reverse turnover within your organization.

Go1 helps millions of people in thousands of organizations engage in learning that is relevant, effective and inspiring.
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