The costly impact of poor employee turnover

A new report by ResourceGuru has revealed the growing issue of employee turnover for businesses and what impact this can have on a workforce.

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Consistently losing employees can have a vital negative impact on employee attitude as well as costing companies a large number of funds to regularly replace staff. Burnout plays a huge part in the reasoning for poor employee turnover, “Burnout isn’t a new concept, but it is one affecting a lot of modern workers today. Separate from stress, burnout is characterized by physical and emotional exhaustion which leads to feelings of detachment, ineffectiveness, and lack of accomplishment. Stress is a short-term reaction to something like a big project or pressing deadline – burnout is an ongoing condition and state of mind.” Resource Guru say, commenting on their findings. 

The main issue correlating with high employee turnover is the time and funds it takes to replace an employee as the starting costs of replacing just one employee is £2,697 for a company size of 1-50, and this cost doubles to over £4,000 for a company size of over 500 employees. Due to these high costs it is ever more crucial to regularly address this challenge. “it’s time for businesses to take a step back and look for help from their largest assets: their employees. Looking at data and insights from current employees enables an organisation to find the strongest teams or individuals within the company, and duplicate these qualities and traits when looking for future talent.” said Kiran Reddy Pasham, CO-Founder, President and Chief Architect at SplashBI, commenting on staff retention.

“With half of employers already struggling to recruit and retain, it’s clear that employers need to address these challenges sooner, rather than later. Whether this means offering greater flexibility or developing more attractive and formalised career paths, ensuring the workforce is skilled and robust is essential to future productivity and economic success” said Mansoor Malik, Managing Director of UK & International, offering a solution to this challenge.

Resource Guru also found that a common reason for such a high employee turnover was due to their current workforce having a much higher workload than usual which result in them being expected to work extra hours.

Another common expected reason for high turnover is salary which has been forever an ongoing issue for companies to manage. When they asked junior and non-managerial respondents for the main reason why they would leave their current job, 23% replied with salary. Although the issue with compensation especially amongst junior based roles is seen as a noticeable problem widespread across all industries and sectors, there are many aspects of work that can factor into a high employee turnover rate such as company culture, work-life balance, and career progression which were all highlighted in Resource Guru’s research as major pain points for respondents when deciding to move on from their current jobs.

Resource Guru concluded their survey by offering ways in which employees can see to this issue, “Companies need to understand that they’re operating in a highly competitive environment when it comes to recruitment and retention of highly skilled workers. Attaining and maintaining a steady workforce should be a priority for all companies with growth and success on their minds.”

They ended by saying “Employee turnover can only be minimized when it is fully understood through a closer look at the data and cultural factors that contribute to employee dissatisfaction. Only then can the insights gleaned be transformed into tangible changes that benefit employees and employers every day.” 

Training and development can also play a crucial role in keeping employee turnover rate low as this could develop their skill set, increase productivity and staff happiness, as well as costing less than continually replacing staff members or upskilling their workforce through recruitment. 

“This is certainly an issue for a number of companies across the UK that don’t believe they are prioritising training for employees, which could have a detrimental effect. By valuing staff and supporting them to grow in their roles, businesses can attract the best talent and be rewarded with lower employee turnover, creating a more stable platform for the rest of the company” said Rob Russell, Director of Reed Finance said, commenting on the importance of training.

With an age of uncertainty in the world of work due to Brexit and Artificial Intelligence making advancements, it’s even more imperative for employers and HR professionals alike to address these challenges.

Rob concluded, “While many organisations do have a suitable training programme in place, it’s less of an emphasis for SMEs who often experience staff losses to larger businesses. This is reflected with a quarter of those asked being concerned there is no guarantee employees will stay on after being trained. However, in a competitive field such as finance, making the right investment now to develop and update the skills of talented employees is essential. Those businesses that make the right investments will reap long-term rewards.”