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Causes and Effects of Employee Turnover [2024]

October 4, 2021
6 Min Read
Photo by
Wicaksono Papay for Paperpillar

Table of Contents:

Employee turnover is when an employee leaves their job at a company. When employee turnover happens, companies may lose employee productivity, be forced to recruit new employees, suffer from lower morale, miss out on sales opportunities, and have to deal with additional expenses that could have been avoided if they had just held onto the employee in the first place.

If you want to try to reduce the turnover rate of employees in your company, then it's in your best interest to avoid these five factors that can heavily impact a business's employee turnover rate.

Cause 1: Lack of opportunity for growth

If your employees feel like there's no room for them to grow within the company, then they're likely to seek employment elsewhere. As a business owner or manager, it can be difficult to provide everyone with an opportunity for growth, but if you don't help create growth paths for your employees, you could see employee turnover rise dramatically.

Cause 2: Toxic workplace culture

In order to retain your talented workers, it's important to make sure that the people who are working on your team are happy with their jobs. Those who aren't happy will be more likely to leave in search of a better work environment, so it’s your job to ensure that your employees are satisfied and feel comfortable with their current workplace culture.

Cause 3: Being overworked

If you're paying your employees decent salaries, then people should be ready to work hard for that money. However, the moments where staff turnover is highest are often tied to employee burnout.

When your employees are expected to complete an excessive amount of work in a short period of time without being given additional support or assistance, they'll feel worn out and begin to place blame on their employers. It's important to allow your workers some time to unwind so that employee turnover doesn't occur due to employee burnout.

Cause 4: Getting underpaid

It's no secret that there are plenty of companies who pay their employees less than they deserve , but this lack of proper compensation can have very negative consequences on employee morale . You may feel like you can't invest more money into employee salaries, but paying your employees what they deserve will help them feel appreciated and will boost employee morale. If employee morale is poor, employee turnover rate will likely increase.

Cause 5: Lack of recognition from management

Recognition is important to employees, it makes them feel as if their work isn't unappreciated. Which means that employee turnover rates are lower when employers try to give credit where it's due. It's up to managers and business leaders to create a work environment that not only helps workers grow within the company, but also gives them credit for what they've accomplished through their hard work.

There are also many negative problems that employee turnover creates which you should be aware of. While there are arguably some positive effects that can occur from involuntary turnover, in this article we’ll mostly be discussing the negative effects.

Effect 1: Decreased productivity

Employee turnover can cause employee productivity rates to go down, which means that your business may fall short of its goals if employee turnover becomes an issue. If employee turnover is high, you'll likely need to spend more money on employee recruitment and replacement costs rather than focusing your efforts on increasing employee productivity .

Effect 2: Recruitment costs

Turnover can increase recruitment costs, which will be a huge cost to one's business. It could mean having to hire and train new employees, paying them higher salaries for a longer time before they become as efficient as their experienced counterparts. Overall, a business' employee turnover cost can be huge so high employee turnover should be avoided for this reason alone.

Effect 3: Lower company morale

One of the biggest issues that businesses face due to employee turnover is low employee morale. When an employee leaves the company, it's important for those who remain at the firm to try and boost their own morale so that it doesn't spread like wildfire and cause additional employee turnover.

Effect 4: Lost sales

If employee turnover becomes high, it may be difficult to achieve company goals. When employee productivity decreases due to employee turn over, companies lose out on revenue that could have been gained by an efficient workforce.

Effect 5: More employee turnover

If employee retention is low in your business, then employee turnover can occur even if employees leave for reasons that have nothing to do with the workplace at all. Sometimes it's simply a matter of an employee having personal issues or wanting to move away from their current location, both of which may lead to the employee finding jobs elsewhere. No matter what the reason however, when employee turnover becomes a problem within a business, it can be difficult to bounce back.

Matter aims to assist in the growth in your business, and with the use of our software, you may also help avoid some of these five major causes of high employee turnover. If you found this article at all helpful, then you might also want to check out our comprehensive guide to employee turnover or employee turnover calculator.

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