Financial Impact Of High Employee Turnover

Recruiting and training employees is a lot more expensive than you might think. And if you are operating a business that can’t seem to keep hold of its staff, it’s going to affect your bottom line at the end of the day. With this in mind, we thought we would take a look at some of the big costs of constantly recruiting, but never retaining, employees. Let’s take a closer look at the financial impact of a high employee turnover.

Hiring costs

According to, there are huge costs of hiring employees. You have to pay for advertising to attract candidates, and there has to be involvement with human resources to ensure that you are doing things the right way. You will have to pay for people to sift through application forms, and if you are a business with high turnover it is likely that there could be hundreds - possibly thousands - of CVs coming through your door. It will cost you to contact potential candidates, and you might have to hire a room for interviews. As you can see, all these costs soon add up - and if you are doing it every week, fortnight, or month, it’s a lot of money over a financial year.

Firing costs

It also costs you to fire people, especially, as point out if you don’t do it properly. There is the time you have to spend going through disciplinary matters, and you may even have to have an investigation. You could lose money or inventory if the person in question were stealing. And you will also find that the impact of a bad apple can have a significant impact on the rest of your employees, which can lose you money through productivity. Which brings us nicely to our next point.


Let’s say you are worth something like $2000 a day to your business - but only when you are doing those money-making tasks that you specialise in. Now think about the time you will lose when you have to keep on replacing employees. It could be anything from a few hours a week to several days a month - and every single day could be costing your company big time. You are also taking other people away from your key tasks, not just the people in the hiring process but also those that have to train up the new guys. And don’t forget, it can take an age for new employees to start getting up to scratch. They will have to go through lots of training sessions, get to know the nuts and bolts of your business, and also begin to understand the company culture. And ultimately, if they do all this and leave after a few months, it will be a complete waste of everyone’s time - and money.

Customer service

A constant stream of new employees can also hit you in the pocket through customer service issues. As we mentioned above, it can take a while for new team members to get acquainted with how your company does things. They might give an old and loyal customer short shrift on a transaction - possibly to the extent that the customer never comes back. And don’t forget, most consumers love familiarity. They like to see the same faces and build up good relationships with your employees and will be disappointed when they leave. And if your ex-employee ends up going to a rival company, maybe they will take that customer - and much more - with them. Don’t forget, if you are a small business, familiarity is one of your key USPs. And if there is a constant stream of new workers turning up every week, there will be no chance to establish those bonds of loyalty.

The impact of reputation on profits

Good talent will always have their pick when it comes to choosing a job, And if you have a high turnover of employees, the simple truth is they will look elsewhere. That means your competitors will steal an edge on you, while you are left with a lower quality pool of candidates to draw from. And when it boils down to it, successful companies enjoy great profits due to the people that work for them. It’s really that simple. So, if you want a more profitable, successful business, take a look at who and how you are hiring. Make some improvements, and you should reap the rewards.
How do you attract and retain high-quality staff? If you have any tips to bring to the table, why not share them in the comments section below.

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