The effects and costs of employee turnover

Admin • 2022.02.09

There are different periods in the labor market. It has its ups and downs. As the COVID started, many businesses started to say goodbye to their employees, and now, the HR department can’t even keep pace with the market. 

At the beginning of the coronavirus, everyone wanted to keep their job, but now, employee turnover is rising, as the people have the courage to switch to a new company. Many reasons affects this situation: some employees just want more home office, others weren’t satisfied with how the management handled the COVID situation. 

What are the types of employee turnover, and how much does it cost for a corporation?

Types of employee turnover

Employee turnover is an important metric because it can be a sign of dissatisfaction from the employees. But sometimes a high turnover rate isn’t mean that something is necessarily bad. For example, fast-food restaurant chains tend to employ people besides school, on the weekends, etc. But if the school is over, the worker will leave. And it’s completely okay.

However, companies that have full-time employees, might want to look after their turnover rate and understand, what causes the leave of the human workforce. 

Voluntary turnover

Voluntary turnover means that the employee wants to leave. The colleague can have multiple reasons to do that: low salary, moving to another city, going on maternity leave, etc. The problem is not always with the workplace, personal life changes can occur too.

The best way to understand voluntary turnover is to ask your employees, why they leave. Based on their answer, you can create a better work environment, a more supportive housing plan, or challenging career paths. 

Involuntary turnover

Involuntary turnover occurs when the boss gets rid of an employee with poor performance or toxic behavior. Next time the HR department needs to focus better on employee selection.

Functional turnover

Functional turnover happens when a low-performing employee is going to leave. 

Dysfunctional turnover

The biggest problem a company can deal with is dysfunctional turnover. It means that an individual with high performance and perfect soft and hard skills leaves the company. You need to put your focus on this type of employee turnover.

The effects of employee turnover

With high turnover, morale will decrease leading to lower performance. 

Costs of resignations

It’s a pretty big deal if your employee turnover is too high. Replacing an employee is costly because you have to spend money on advertising the position, buying new items for the new colleagues. But, the main problem is that it needs lots of time to show a new member, how things are done. It takes a lot from the manager’s time, from other colleagues’ time. It is simply not worth it and could cost thousands of dollars if your business operates with low performance. 

How to solve the ‘worker turnover’ problem?

First, investigate! What causes this problem? Maybe…

• The onboarding process isn’t ideal
• Your expectations are too high
• The work is too stressful
• There is a lack of feedback
• Career paths are not clear
• There aren’t any team-building activities
• Knowledge management is not effective
• The HR department is choosing the wrong people

There is no recipe that will always work. You need to ask questions and create a strategy to put employee turnover in reverse.