How Employee Turnover Affects Your Business
Leadership Development

How Employee Turnover Affects Your Business

Bonnie Hagemann • October 11 , 2022

The Impact of Employee Turnover on Your Business

Now more than ever before, organizations are consistently facing the challenges of employee turnover and the risk of losing their top talent to other businesses in the marketplace. The great resignation has changed the game when it comes to hiring and retaining top talent, and if organizations fail to act, they will find themselves also facing the bigger obstacles that may come along with their employee turnover issues.

A business is made up of many elements including a variety of departments, objectives, strategies, processes, and most importantly, its people. Without your people, it would be impossible to reach and accomplish your business’s desired mission, objectives, and goals. This makes it critical for organizations to further examine their initiatives and the employee experience, and what they can do differently to improve this experience, in turn, improving employee retention and reducing employee turnover on all business fronts.

If your organization experiences a high employee turnover and rate, there can be a critical impact on multiple areas within your business and its desired goals. Organizations and their leaders must learn to not only recognize and better understand their employee turnover issues, but also the effect and impact these issues can have on the overall business and all its people.

Significant factors of a high employee turnover rate that can affect your business can include:

  1. Loss of business revenue and other financial burdens
  2. Lower productivity and morale of the people within your business
  3. Loss of both current and potential incoming top talents

Each of these factors can impact all levels of a business and its people and bring challenges to future business needs and maintain a good employee retention rate.

Critical Effects of Employee Turnover on Business Success

  1. Loss of Business Revenue and Other Financial Impacts

Profitability is essential to the continued growth, development, and success of your business and its services. As a leader, enhancing your leadership and your employees in all areas of your business will help to maximize profit, increase revenue, and further enhance your company’s brand, reputation, and company culture. High employee turnover and low employee retention rates can create financial burdens for the organization relating to budgeting, hiring a replacement employee, and even lead to a potential loss of business and sales.

  • Budgeting – The turmoil associated with high employee turnover will make the budgeting process more complicated. Not only will a business’ compensation expenses vary greatly over time, so will its revenues and expenses for recruiting, onboarding, and training for new employees.  This unpredictability makes managing cash flow extremely difficult.
  • Hiring a Replacement Employee – The average cost of replacing an individual employee in the event of employee turnover can range from one-half to two times that employee’s annual salary. This is a costly expense for everyone, and even more costly when a business experiences a loss of multiple employees. Employee turnover expenses include the cost of an employee exiting the company and the recruitment, onboarding, and with hiring and training of any new employees.
  • Potential Loss of Sales – If an organization is experiencing high turnover rates, chances are it may suffer from a loss in its overall business and sales. Employees make up the workplace and if there is a lack of both efficiency and number of people due to high turnover rates, this can impact a business’s sales and overall efficiencies. Lack of employee retention can make it harder to achieve company goals, maintain consistency in processes, and in turn, impact your customers and their overall services and experience with your business. Improving employee retention can enhance your business profitability and maintain consistency throughout your business objectives, processes, and desired goals and accomplishments.
  1. Lower Employee Productivity and Morale

Low employee morale is one of the biggest issues that an organization can face with its employees and staff. When employees do not feel supported or valued by their organization or leadership in their workplace, a lack of employee productivity and morale is inevitable. This could lead to employees leaving your business resulting in higher employee turnover rates.

Employees desired to feel seen, supported, and heard, and to be invested in by their organization and its leadership. Without effective leadership and healthy workplace culture for all employees, it is likely employee turnover rates will increase. Effective leaders and their actions make an impact on employee retention and how employees will operate and feel in their work environments, so take action to enhance your leadership and culture to reduce these critical business risks.

Employees also experience challenges when high turnover rates in their workplace occur, due to the impact on their personal experience and how employee turnover impacts their roles, duties, and workplace culture. Employees may be forced to take on heavier workloads in the event of employee turnover in their organization and have their position impacted by these losses. It is important leaders support their employees and do as much as possible to prevent the placing of the workloads of one staff onto another and to encourage and empower employees within their roles.

Learn more about your employee needs or obstacles that impact employee retention by checking out our technology platform EDASurveys™, a one-stop shop tool to help you gain insight and feedback into your business and its cultural health needs.

  1. Loss of Good People and Top Talent

Investing in your people is a large expense, but on the contrary, not investing in your current people or new potential talents will cost you more in the long run. Therefore, leaders must take action to ensure they are effectively investing in their people and their business’s cultural health by maximizing the employee experience for all.

Taking care of employees with competitive benefits and compensation rates, effective support and leadership, and the cultural health of your organization can set you apart from the rest in the marketplace. This will be essential for your business to stand out and obtain an advantage over your competitors. Taking care of your current employees will help you to retain your top talent. Organizations must act in ways to benefit their employees and to keep their best talent possible. With the competition in the marketplace today, these actions are now more critical than ever for leaders to achieve effective and good employee retention.

It will also be critical for organizations to focus on employee retention when hiring and retaining top talent. If incoming talent can sense issues with your business’s cultural health and the effects of the high employee turnover, this can also impact the hiring and retaining of new top talent for your business. New employees may also experience challenges surrounding the new responsibilities and workloads and adjusting to your business culture. When losing employees, organizations will often face the issue of having to replace them with someone else. It will be imperative for businesses to understand employee turnover and its effects on their business, and what can be done to attract new talent and maintain their current talent pool.


At EDA, our priority is to help your organization grow and thrive in today’s marketplace. To learn more about how to enhance your executive and leadership development and business’s cultural health to gain insight into your employee turnover and increasing employee retention needs, check out our technology and services offerings and contact our EDA team today:

Recent Articles

Leading with EQ: 8 Ways to Ignite Emotional Intelligence in Teams

Leading with EQ: 8 Ways to Ignite Emotional Intelligence in Teams

How Emotionally Intelligent Leaders Are Driving Success

How Emotionally Intelligent Leaders Are Driving Success


Trends In Executive Development

Trends In Executive Development

The Trends in Executive Development report has been the leading compilation of research for organizations across the globe to benchmark their executive and high-potential development.

Leading with Vision

Leading with Vision

A deep dive into the notion that a compelling vision is a differentiator for organizations that want to hire and retain talent, be more competitive, and thrive in uncertain times.

The Courage to Advance

The Courage to Advance

A powerful collection of 36 stories about how the world's most successful women have overcome some of life's biggest challenges to reach the top of their professions.