The Cost of High Employee Turnover and What You Can Do About It


Employee turnover is a subject that informed company executives take very seriously. When the high cost of turnover is fully understood, savvy executives recognize the need to manage this problem if they want to maximize profitability. That is why so many companies establish employee friendly policies in an effort to keep turnover low.

Losing an employee could cost tens of thousands of dollars in some cases and as much as 1.5 or twice the employee’s annual salary in worst case scenarios. These sobering numbers make it crucial for hiring managers and corporate leadership to take employee turnover seriously and to proactively focus on strategies to lower turnover rates.

Reducing Employee Turnover through Better Hiring Practices

Excessive employee turnover can often be attributed to poor hiring practices. When an employee’s skills match the job they are applying for and their personality also fits in well with the other employees, then you have a winning formula for success.

Oftentimes, employees are technically qualified to perform well in the role they accept, but they aren’t compatible with the corporate culture. Given the number of hours people spend working, it is very important that they like coming to work and feel connected to their co-workers. You can ask behavioral interview questions to determine how employees will react in certain situations as a way to get a sense about whether they will work well with others in your work environment.

Pay Competitive or Generous Wages and Benefits

When you consider that employees are working specifically to earn a living, it is only logical that your company must offer competitive or slightly higher than average compensation rates to minimize employee turnover and lower recruiting costs.

It is important to do your research before establishing your compensation packages for different positions. If you are paying on the low end of the scale for your industry, you can expect higher turnover rates. You may think you are saving money by skimping on pay rates but the “best and the brightest” will leave you for greener pastures after you spend the money to recruit them and train them.

Create a Workspace and Corporate Culture that is Pleasant and Comfortable

If your employees like the work atmosphere, they are more likely to look forward to coming to work. Little things like having ergonomic chairs that are easy on their back or splurging on a breakroom with free juice drinks and a pool table make work fun and enjoyable.


Costs like these that are paid to keep employees happy and productive are a drop in the bucket when compared to the cost of high turnover.

Offering flexible work schedules that take the individual’s needs into consideration is one inexpensive way for a company to show they care. Employees frequently cite work-life balance as one of the biggest challenges they face. If you can offer a four-day work week or the option of coming in late after the traffic rush is over, your employees will appreciate your company’s effort to accommodate their needs.

Show Your Company Is Committed to a Long-term Relationship with Employees

One of the issues that negatively impacts both employees and employers is the lack of commitment each party has to the other. When employees feel like they are expendable and will be replaced at the drop of a hat if times get hard, it is harder for a business to count on long-term relationships. For this reason, it is more important than ever to communicate how much you appreciate your employees and their contributions.

When business leadership listens to employees’ ideas and implements the best ones, employees feel a sense of pride and ownership in the future of the business. Companies seeking to foster this type of goodwill with team members will reap the benefits associated with fresh employee ideas and a more committed work force.

In a challenging economic climate, some companies immediately respond by laying employees off. Progressive leadership recognizes how these drastic actions will impact company morale and seeks better ways to cut costs. For example, in the Great Recession, some companies cut back everyone’s hours to save money in an “all for one and one for all” spirit of cooperation, eventually returning employees to their full-time status after the economy recovered.

Discussing an employee’s career path at the company and planning for their continued growth and success is music to an employee’s ears. Change is stressful for anyone. If you give employees hope for a bright future at your company, they will have no reason to leave.

This kind of caring and compassionate demonstration of loyalty is an excellent way to get your employees to stick around. While rumors abound related to a lack of loyalty in the workplace, smart companies make an extra effort to prove those assumptions wrong.

Final Words

High employee turnover rates are a huge problem for many companies. By taking a few calculated steps to solve the problem, the company will save money and establish the stability necessary for sustained growth. While new employees are a necessity, it is much better to hire them in response to expansion rather than to replace disgruntled employees.

About the Author:

Jasmine Williams covers the good and the bad of today’s business and marketing. She was rummaging through her grandma’s clothes before it was cool and she’s usually hunched over a book or dancing in the kitchen, trying hard to maintain rhythm, but delivering some fine cooking (her family says so). Tweet her @JazzyWilliams88



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