High turnover rates can negatively affect a company and its employees in many ways. With the constant need to hire and train new employees, it is easy to veer from true mission and vision of the organization. By retaining employees, companies can provide a higher caliber workforce that positively affects the bottom line. Businesses can lower turnover rates by providing adequate training, rewarding employees for a job well done and creating a company culture of trust. Show
Impact of Turnover on RevenueEmployee turnover has a direct impact on company revenue and profitability. For example, according to the "Organization Science" magazine, the estimated cost of a lost employee earning $8 per hour at a retail chain store is $3,500 to $25,000. Aspects contributing to this include hiring expenses, training labor, lost sales and productivity. Obviously, the revenue impact can be much higher depending on the industry, employee’s position and wage. If a severance package is paid, this is an expense with no return on investment. Consider, also, management labor costs in placing classified ads, reviewing applications, interviewing and training. Although some companies utilize a job-placement service, this is still an expense. Additional expenses result from lost productivity or a lost customer base. Low Workplace MoraleA high turnover rate can result in low employee moral. This may stem from overworked employees who have had increased workloads and responsibilities due to a lack of an active or trained workforce. New employees are not immune. They too may suffer from low morale as they struggle learning new job duties and procedures. Continuation of this type of work environment can result in the company having a more difficult time attracting and keeping high-quality talent. Deteriorating Product or Service QualityLower productivity and sub-par quality of work can result from a disruption in daily operations due to an overall low number of employees or inexperienced employees without complete training. This is especially true in industries where repetition and comfort level play a larger role than innovation. For instance, new hotel clerks may not provide top-tier customer service, as they are unfamiliar with the organization's policies. This could manifest in situations as trivial as providing refunds from broken snack dispensers. Although a seemingly small issue, there could be a sizable impact on customer satisfaction. Reduction in Marketing Return on InvestmentEven if marketing expenses remain consistent in efforts to attract new customers, the return on investment is lowered if the company is losing return customers and customer referrals due to inexperienced staff or lower-quality products. This increases the cost of a one-time customer, lowering marketing return on investment. Author Date published September 10, 2019 Categories High turnover is an obstacle that many businesses face, to understand the true cost of this, and how businesses can adjust their culture to reduce their turnover, HRD Connect heard from Cath Bishop, Senior Performance Consultant, Will It Make the Boat Go Faster. As a previous successful Olympian, she draws a comparison between high-performance sport and business. We have all seen the churn of Premier League managers and the lack of upturn in football clubs’ performances as a result. The same applies across organisations. If turnover rates are high, the immediate consequences are severe: loss of valuable knowledge and experience, loss of morale for those left, and loss of belief in the team’s competence and ability to perform. None of those are quick or easy to replace. Then at a point when new team members start arriving, they typically encounter a culture without a clear identity or clearly understood collective purpose. The initial process of connecting and establishing relationships takes time, leaving a culture lacking the vital lifeblood of trust and commitment to a collective vision. Levels of engagement and productivity start to stutter. The link between work and sportBusiness and sport both need sustainable high-performance cultures – this requires a balance between building on experience, expertise and performance gains to date alongside fresh input from outside the team to keep the culture dynamic. High staff turnover tips this balance one way and performance suffers as a result. Whether it’s the Olympic rowing team, a Premier League football club or a business, performance advantages come from investment in the continuing development of their people (NB ‘people’ rather than ‘athletes’ or ‘employees’) over a longer period. In the business world, staff members who can build on their experience, continue to grow their expertise and see how to add further value through collaboration are similarly crucial to organisations looking to stay competitive, agile and future-ready. In UK Sport’s bid to sustain world-class performance and find the next marginal gains for Team GB, athlete retention is becoming the new buzzword and priority. Advances in sports medicine, a focus on wellbeing and better understanding of how to create high-performance cultures and training environments are allowing athletes to extend their careers at the highest level. An athlete who can sustain a career over two or three Olympiads is immensely valuable. New athletes require years of investment in support and coaching to reach the top level. Wasting the investment, you have already made in people who still have further potential makes no sense. Organisations find themselves in a similar position – recruiting and finding new talent is an expensive and risky business. A high-performance culture prioritises the growth of its people, combining expertise and experience with ongoing personal development and renewal. It’s that open, learning culture that feels safe and supportive that is undermined by the experience of and reactions to staff leaving. In the Olympic rowing team, every rower, whether in their first Olympiad or their fifth, gets out of bed motivated to find a way of making the boat go faster. This entails a growth mindset from all team members towards exploring new ideas from across the fields of sports science, technology and wellbeing. That desire for constant improvement drives high performance and is as invaluable in the competitive business world as it is to the world of competitive sport. The effects of high turnoverHigh turnover disrupts and destabilises that culture of constant improvement: it starts to feel less safe to experiment in an unstable team environment, it becomes easier not to explore new ways of improving performance, and the missing connection to a collective vision undermines basic motivation. When teams are starved of the oxygen of a growth mindset and the momentum that comes from that, performance inevitably suffers. What has helped athletes to extend their careers and how might organisations learn from them? First, health and wellbeing is a huge part. Macho sporting environments where athletes were praised for carrying on when injured or when seriously fatigued are falling by the wayside. Such behaviour only curtails sporting careers and diminishes performance levels. No athlete would believe that more hours in the gym and being shouted at by a coach is the answer to going faster in their next race – speed and improved performance requires smart training, recovery, trying different things, and learning from past performances within the sporting world and beyond. The same applies to organisations. Workplace environment and cultureWorkplace environment and culture are key. Scandals across Olympics sports from British cycling to the US gymnastics team have shown that the right environment is crucial if high performance is to be sustained over the longer-term. The emerging breed of successful coaches, as shown in football through Jurgen Klopp, Pep Guardiola, Gareth Southgate and Phil Neville, demonstrate a different language, a different style, and a different way of engaging with their players. They speak a language of support and respect – no more the ranting Brian Cloughs on the touchline, much more the language of support, nurture and trust that we saw from Gareth Southgate at the World Cup last year, where it’s ok for a footballer to go home for the birth of their child during the World Cup. The style of engagement is changing too. Players and athletes are people first, and footballers, rowers, cyclists second – such a statement used to be dismissed as being soft or uncommitted. Now it’s seen as essential to enabling players to rise to the highest levels under the greatest of pressures. Lastly, the language of performance has spread across sporting pitches and pools over the last twenty years whereby athletes and coaches focus on their performance and what lies within their control, not just winning next Saturday’s match. What's HotHRD Roundtable Report: Levelling Up Onboarding for...Attracting new talent is shooting up the priority list, but also proving more difficult than ever. A... View event HRD Roundtable Report: Redefining Company Culture ...The process of redefining a company culture is a complex one. Culture contributes directly to the da... View event Learning to win the talent war: how digital market...This report documents the findings of a Fireside chat held by ClickZ in the first quarter of 2022. I... 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This sense of purpose inspires results. Staff in organisations with high turnover have often lost sight of why their job matters – the results are then less than inspiring. Who can resist the opportunity to make the podium at an Olympics? Who can resist the opportunity to find out what they are capable of in the workplace? Who can resist the opportunity to make a real impact in the world around them? The challenge for business leaders is to create an environment where staff are hungry for these opportunities, keen to keep learning and finding new ways of doing things, and working together how they can make the business boat continue to go faster, not jump ship in search of a faster vessel. Dr. Cath Bishop – Senior Performance Consultant at Will it Make The Boat go Faster Dr. Cath Bishop is Senior Performance Consultant at Will it Make The Boat go Faster, a performance and leadership consultancy specialising in high performing senior teams. Drawing on her unique combination of experience, Cath understands the resilience and leadership required to manage complex challenges. She leads seminars on topics including resilience, leadership, high performing teams, peak performance and dealing with pressure, and has worked with clients such as Rolls Royce, Coca Cola, Microsoft and many others. https://www.willitmaketheboatgofaster.com/ |
Which of the following is an implication of high employee turnover in a company
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