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Employee Turnover is Always Bad for an Organization, Right?

By Leo Ramirez Posted on April 27, 2017

Not every employee is a great fit for every company. We know that. It’s why companies spend a significant amount of time and money reviewing applications and interviewing candidates before making job offers. But sometimes, even after the screening process, you end up with employees who don’t quite work out and they leave.

Employee turnover happens. It is a fact of business. In some cases, such as with perpetually low performers or overly negative individuals who can bring down employee morale, employee turnover is necessary to preserve your company culture. But in all honesty, those instances should not happen that often.

While employee turnover is not necessarily a bad thing, in most instances it probably is. Here’s why:

1. It’s Costing You Money

Finding and hiring new employees is expensive. Every aspect of the hiring process will cost you. Whether it’s a direct cost, such as placing job postings or using a hiring firm, or an indirect cost, such as needing employees to take time away from their jobs to sit in on interviews or conducting background checks, you are paying for it. And it keeps costing you even after you hire someone.

All positions, including entry-level positions, require some sort of orientation. More specialized roles can need lengthy training or onboarding, both of which have direct and indirect costs. Not only are you spending money to train your new employees, the time they spend in training is time they are not yet doing their new job.

2. It’s Costing You Company-Wide Performance


Seasoned employees are more efficient than new hires. They know their responsibilities and have created their own systems to do their job effectively.

New hires are still trying to figure everything out. While it’s completely normal, it does mean decreased productivity. If a significant portion of your workforce is always new hires due to turnover, your company is going to struggle to improve.

3. It’s Costing You Expertise

When you have high turnover, there is not much opportunity for sharing the knowledge and expertise that only experience can bring. Long-term employees know more than just how to do their jobs. They understand the company culture and have a better grasp of your overall big picture.

New employees simply don’t yet have the ability to see how their role fits into your company as a whole. They may not realize how their performance impacts other departments and as a result are more prone to inadvertently cause confusion or delay than seasoned employees.

4. It’s Costing You Customer Satisfaction


Whether signing up for a new service, purchasing a new product, or asking for help, every time your customers contact you they expect to have their issue resolved efficiently.

Certain aspects of customer service are not company-specific. For example, active listening skills can contribute to a positive customer experience no matter what your industry.

But customer service skills alone are not enough.

Customers expect your employees to know the answers to their questions. Seasoned employees can often respond to customer inquiries immediately. After all, chances are they have encountered the question or concern before. But a new employee does not have this background yet. As a result, it takes them a little longer to help your customers.

An occasional delay isn’t likely to have a big impact on overall customer satisfaction. But if you have high turnover, chances are your customers will have to wait longer to get questions answered and services started.

5. It’s Costing You Employee Satisfaction

There are a lot of components that impact employee satisfaction and many of them are affected by high turnover.

If not all positions are filled, the employees you do have end up taking on the responsibilities of the employees you don’t have. Employees who need to do more to cover for unfilled positions may feel they are taken advantage of or undervalued.

Additionally, positive workplace relationships are essential to employee satisfaction. After all, when you spend 40 hours a week with people, your relationship with them can make a big difference in your day. High turnover can make it difficult for people to form these all important relationships.


Most companies understand that employee turnover can be expensive. But the cost of turnover goes far beyond, the amount of money it takes to train a new employee. High turnover can cost your company everything from employee and customer satisfaction to company-wide performance. If your employee turnover is costing you, it’s time to focus on how to invest in your best company resource, your current employees.



Author: Leo Ramirez

Leo is the co-founder and CEO of Encast, an organization dedicated to improving the way CSR professions create, manage, and measure CSR programs. Leo is passionate about the role that culture plays in business success. Leo has launched and managed social ventures, lead multi-disciplinary teams, and built solid relationships with civic and corporate leaders. His 25-year career has spanned executive management, business development, consulting, nonprofit management, technical support and engineering positions with Southwest Key Programs, Oracle, Sun Microsystems, Coremetrics, Trilogy and Apple.

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