Employee turnover is a phenomenon that affects all companies, regardless of their size or sector. For this reason, knowing how to avoid employee turnover has become vitally important for all organizations.

 Employee turnover brings with it a number of problems that affect the core of the organization. These can range from loss of talent to a negative impact on company culture and employee productivity. 

However, there are effective strategies to reduce turnover by promoting employee loyalty and engagement. Get ready to explore the terrible consequences of employee turnover to become even more eager to learn how to combat it effectively.

But first of all, how can we avoid turnover if we don’t know the extent to which it exists? Check out this guide to calculate your turnover rate. And now let’s get started!

How does employee turnover affects a company

A high turnover rate can have a major negative impact on a company, either directly or indirectly, and in both the short and long term:

1. Increase in financial expenses

Employee turnover entails significant economic costs for a company. These costs include:

  • Expenses associated with hiring new employees.
  • Time investment in onboarding and training of new employees.
  • The loss of productivity during the time it takes for a new employee to reach a good level of autonomy and correct performance of their tasks. 
  • It could also result in the loss of customers if the employee’s departure results in a lack of continuity in the service offered.

2. Loss of experience and knowledge

During the life cycle of an employee, they learn new things that they implement in their daily work in the company. Likewise, they acquire more experience that allows them to be more agile and effective in the execution of their tasks. 

Whenever an employee leaves the company, all that knowledge and experience is lost. This is a problem in any case, but it can be especially problematic in highly specialized or leadership roles. In these cases, the experience and knowledge gained are key to the company’s success.

3. Impact on the quality of work

A high turnover rate makes it difficult to maintain the quality of your company’s work. As we mentioned at the beginning, new employees need time to get used to the pace of work and become experts in your product

This means that, at least for a while, you may not be able to offer the best service and advice to your customers. You may constantly face errors, which could become frustrating for your customers. In addition, if employee turnover becomes a frequent issue, your customers may feel that they are always talking to a different person.  This could negatively affect your corporate image.

4. Impact on morale and culture

Whenever there is any kind of employee turnover, whether voluntary or involuntary turnover, the morale of the team is affected. The departure of colleagues generates an aura of instability; if it is due to dismissal, “are things going well?”, “will I be next?”, if it is due to resignation, “am I in a good company?”, “should I also look for another opportunity?”.

Doubts, uncertainty and mistrust always arise. This inevitably makes the work environment more difficult and can affect employee productivity, satisfaction and engagement. In addition, this environment can make onboarding new employees more difficult. Analyzing your employee satisfaction index will help you understand the context in which you find yourself and be able to deal with it in the best possible way.

5. Difficulties in long term planning

When we are in a time of high turnover, thinking about a long-term strategy becomes more complicated. It is difficult, and unproductive, to try to set realistic goals when you don’t know how many hands there will be to continue with the line of work. Constant employee turnover could lead to project stoppages or even cancellations, which could completely affect the business strategy.

In addition, staff turnover makes it much more difficult to implement new initiatives. Not only because of the lack of workers, but also because of the barriers that new hires may pose. If these people do not fit with your company culture and values, they may not look favorably on some initiatives or processes. They may even find it difficult to adapt to the culture and coworkers. They may eventually choose to look for another company that is a better fit for them.

6. Impact on the company's reputation

A high turnover rate is a sign that something is happening. In this context it has a double impact:

  • Thinking about looking for new talent is a bit of an uphill battle, as a negative reputation makes it difficult to recruit qualified talent.
  • If it gets out, it could mean the loss of clients, or greater difficulty in acquisition.

Employee turnover is natural, sometimes it is very difficult to prevent it from happening. Even more so now that we are in a time of high demand and change on the part of workers. We recommend that you do not lose sight of your employer branding strategy. This way, you will have a stronger position in this type of circumstances.

19 Strategies to reduce employee turnover

Employee turnover is a natural occurrence. The reality is that we cannot expect every new employee to retire with us. Nor can we expect everyone who joins the company to be a perfect fit; there may be times when this does not happen. Whether voluntary or involuntary, departures are commonplace. But it is true that to a large extent employee turnover is avoidable.

How to reduce employee turnover has become a big question for People teams in recent years. Depending on whether turnover is voluntary or involuntary, the strategies we can implement to reduce it are different.

Un equipo contento: la forma de evitar la rotación de personal

11 Strategies to reduce voluntary employee turnover

Voluntary turnover occurs when employees decide to leave the company. This type of turnover is the one that has the most negative impact on the company, mainly because of the surprise factor, since in most cases it happens unexpectedly. For this reason, it does not sound unreasonable to have a plan with strategies to help us alleviate this possible situation:

  1. Make personalized career development plans for each employee: by promoting continuous training you will make employees feel valued and see that they have opportunities for growth within the company.
  1. Offer corporate benefits packages: according to your budget they will vary, but there are always actions you can propose. These range from health insurance to retirement plans, performance incentives, flexible compensation plans, or even offering fruit and healthy snacks in the office.
  1. Launch regular employee wellness surveys: these surveys will allow you to identify areas for improvement so that you can take corrective action.
  1. Promote DEI in the company: create a culture of diversity, equity and inclusion where respect for the individual differences of employees is encouraged.
  1. Join the smart working movement: this work method promotes work flexibility, with options such as telecommuting, 4-day work days or flexible or intensive schedules, where the main thing is to seek a work life balance. It revolves around policies that support family reconciliation
  1. Implement gamified employee recognition systems: to promote participation. One of the factors that most influence employee satisfaction and performance is the fact that there is a good atmosphere among colleagues. A good way to do this is through employee recognition.
  1. Open channels of communication and feedback: giving also the possibility to share comments anonymously so that employees can express their concerns and suggestions without fear of reprisals.
  1. Create solid onboarding programs: this way, you will be promoting a successful integration of new employees to the team from the very beginning.
  1. Organize team building events and activities: to strengthen team cohesion. Remember that even if your team works remotely, there are many options to promote remote engagement and reduce employee turnover.
  1. Launch 360 reviews: that promote constructive feedback. This way employees will have a clear direction for performance improvement and professional growth. Here is a generic 360 review template to use in your company:
  1. Offer employees the resources and tools: they need to perform their work properly. This will make them feel more comfortable performing their jobs, which will positively affect their satisfaction and the effectiveness of their work.

8 Strategies to reduce involuntary employee turnover

Involuntary turnover, or layoff, occurs when the company decides to terminate the employment relationship with an employee. Unlike voluntary turnover, this type of employee turnover is beyond the employee’s control. So what strategies can help us reduce it if it is our decision whether it happens or not? Well, there are:

  1. Thoroughly review recruitment processes: make sure you are recruiting the right candidates from the start. This will prevent decisions from being made that could affect the stability of the team.
  1. Establish clear and consistent conduct policies: this will ensure that everyone is aware of how to act to avoid dismissal for misconduct.
  1. Promote continuous professional development: ensure that employees are up to date on trends and new tools in their field. This way you will avoid layoffs due to lack of adaptation to the growing needs of the company.
  1. Offer transfer opportunities to other departments: or roles within the company. It could be that sometimes it is not the employee’s issue that is the reason for the dismissal, but rather that the company’s strategy no longer contemplates a position like theirs. Offering the option to participate in other activities will encourage talent to continue to develop within the company, and thus avoid unnecessary layoffs.
  1. Listen to your employees: it is likely that many of them are experiencing personal or professional difficulties that could lead to negative attitudes that could lead to dismissal. Before making a decision, establish open and accessible channels of communication so that employees can express their concerns and seek solutions before it is too late.
  1. Create a conflict resolution plan: this will promote the design of a roadmap early and constructively to avoid escalations that may result in layoffs.
  1. Encourage constructive feedback: linked to the previous point, if employees are aware of what they need to improve, they will be more likely to work in that direction. To do this effectively, we recommend:
    • First, launch 360 performance reviews: choose the type of performance review that best suits the needs of each case.
    • Then, promote 1:1 meetings: in which manager and employee can discuss the results of their performance appraisal. They can then start working on areas for improvement.
  1. Make sure you have evaluated all possible options: and no viable solution presents itself.  Above all, always before making the decision to terminate an employee, review the alternatives. Always keep in mind the huge impact turnover has on employees.

Employee turnover can have a significant impact on a company, both financially and in terms of morale and corporate culture. However, with the right strategies, companies can reduce employee turnover and promote long-term employee retention. By implementing the right strategies, companies can create an environment where employees feel valued and engaged, which in turn can lead to greater business success and stability.