Causes & Effects of High & Low Staff Turnover (2024)

By Devra Gartenstein Updated March 01, 2019

Companies often thrive based on the talent provided by their employees. Yet, if a company is faced with frequent turnovers, the efficiency and effectiveness of business operations could suffer. Similarly, those companies that maintain a consistent workforce may be able to grow as a result of their employee base performing consistently. Understanding the causes and effects of turnover can help your company develop strategies and policies to increase the odds of keeping the staff members you value.

Causes of High Turnover

If your employees don’t feel valued, challenged and well compensated, they’re likely to move elsewhere. Workers know they are valued when managers support them in their work by giving feedback and providing opportunities for professional skill development. Without challenging work or a clear path to personal and professional growth, an employee may look to another company where those desires can be met. Still, even with interesting work and abundant opportunities, if the pay is low and benefits are non-existent, a valued employee may choose to accept an offer elsewhere in order to make more money or enjoy company perks.

Effects of High Turnover

When your staff turnover is high, your company is run by people who aren’t experienced and most likely aren’t particularly motivated because they see their co-workers leaving regularly. Your customers will have inferior experiences with your products and services because these items are manufactured and delivered by people who haven’t been around long enough to do their jobs well.

When regular turnover occurs, a business must continually train replacement staff, incurring additional expenses in bringing employees up to speed, as well as having to pay for the mistakes they make due to inexperience. Additionally, your previous training expense and expertise walked out the door along with all your previous employees. If you are in a business with specific industry knowledge that requires specialized training, you are allowing that knowledge and training to be given freely to others, perhaps even a competitor.

Causes of Low Turnover

Workers who feel they are valued and respected are more productive and eager to engage in the workplace. A healthy corporate environment will encourage employees to stay with your company over time when employees feel well treated through fair pay, benefits, healthy-living initiatives, collaborative projects and open communication between management and staff. Opportunities for advancement increases the odds of employee retention, provided you offer these opportunities fairly and equally. Economic conditions can also contribute to low turnover. If unemployment is high and workers know they’ll have a hard time finding new jobs, they’re more likely to stay with the one they have even if it doesn’t entirely meet their needs.

Effects of Low Turnover

Your company will be well run and well regarded if high-quality staff stick around for a long time. The longer they work for you, the better they do their jobs, and the more they learn about how to troubleshoot and handle idiosyncratic situations. They get to know your customers, and they do a good job serving as the face of your company. Customers think highly of your business when they see that you keep employees over time, especially in industries such as food service that tend to have high turnover rates. When your turnover is low, you save money by avoiding unnecessary mistakes. Lower turnover can also have a beneficial effect on the payroll even if you pay your long-term employees well because you don’t have to train new workers and you avoid losing efficiency while they get up to speed.