The true cost of employee turnover

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High employee turnover rates can become a great cost for companies, but a focus on employee retention practices can go a long way in ensuring employees' wellbeing, and business success.

The last few years have not been the most stable to say the least. The way we work, interact with people and the world, and overall, the way we live was challenged most suddenly and most drastically. 

Throughout the course of these changes, priorities also shifted, from things as simple as how we choose to spend our free time, all the way to deeper thoughts requiring us to actually think about what we value more in our lives.

And in these introspections, inevitably, the relationship people have with their jobs, colleagues and employers is questioned, challenged and in some cases discarded in hopes of a better future and professional purpose. But what does this mean for businesses and their ability to drive good results?

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The cost of employee turnover

Employee turnover can be very costly as well as disruptive to the company. There are of course economic measurable costs that come from high turnover rates, but there are also significant cultural consequences/costs  that are worth considering.

The economic cost of employee turnover

The economic cost of employee turnover, also referred to as the attrition cost, varies depending of each individual, as it is calculated based upon salary. There is research, however, that calculates an average estimate of what these costs may add up to. 

Here we need to take into account two different kinds of costs that will come up when an employee chooses to leave the company. Firstly, the cost of replacing such employee can go anywhere from 50% to 60% of said employee’s salary. On the other hand, we also need to consider overall costs for the company, which can amount anywhere from 90% to 200% of said salary.

To sum it all up, the cost of high employee turnover rates can amount to anywhere between one half to even double the cost of an employee’s salary. But money is far from being the only thing to worry about. 

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The cultural cost of employee turnover

Employee turnover is not only a matter of economic costs, we also need to consider cultural consequences that stem from high employee turnover or from a lack of a strong strategy over employee retention. 

When we talk about cultural consequences we are talking about what high turnover rates really say about a given company. For example that there is a lack of engagement, a not so clear company culture or purpose that drive employees to do their best, and that productivity is most probably weak as a result of it all. 

Furthermore, when employees leave, the knowledge and value that they added to the company is also gone, which is very difficult, costly and time consuming to replace. Some employees can even feel lost or unproductive when a certain colleague decides to part ways with the company.

The result is a loss of productivity, a position that will temporarily remain unfulfilled and forced upon others, which in turn can bring burnout and an overall unhealthy work dynamic. And even when the position is fulfilled, it can take a new employee a great amount of time to deliver similar results and performance. 

The importance of employee retention practices

Employee retention goes hand in hand with employee turnover, as it refers to the set of practices, actions and strategies focused on keeping talent and reducing turnover costs. High retention rates would mean that a company is successful at engaging and motivating employees, as well as at offering an overall positive employee experience. 

In fact, retention rates are not only an indicator to employees’ state of mind, but also to business success. High employee retention rates mean that through engagement and motivation, employees are able to provide better results. So for any company looking to improve results, employee retention practices should be on top of the list of priorities. 

Taking good care of employees is the key to business success

Taking good care of employees and providing a positive experience can in turn become a pillar to business success, outperformance and a means tu reduce turnover costs. But before implementing retention practices it is important to understand why do people leave, and what is it that could make them stay. 

employee turnover

Although there is no size fits all solution, and no way to know what a given company’s problem might be when tackling retention and turnover, here are a few statistics that can help paint a picture of what is it that disengagement actually translates into:


34% of disengaged employees are actively applying for new jobs and opportunities. 

47% of disengaged employees consider leaving the company within the next year.

28% of disengaged employees have interviewed for a new job in the past 6 months. 

There are many more problems that can cause high employee turnover rates, but disengagement is clearly one that should be looked into carefully. Retention practices, actions and strategies should therefore consider employee engagement as a primary indicator of wellbeing, productivity and business performance. 

Engaging and motivating employees is just as important as hiring talented individuals. This is, the process of bringing people on board does not stop with a signed contract, it is a journey that never ends and should be attended to regularly if not constantly. 

employee turnover

Employee engagement comes in many ways

As we stated before, there is no one size fits all solution to engagement, and there are many aspects that come into place when bringing people together towards a common company goal, purpose and culture. 

However, numbers suggests that employees, as well as consumers and young generations entering the job market, are increasingly concerned with sustainability and all that it implies. In fact, the latest research carried out in Spain showed how 95% of consumers value ethical aspects more when comparing a brand, service, or product. Similarly, a UK survey found that 29% of workers will not work for a company that profits from unsustainable practices.

So naturally it is worth considering how sustainability can play a role in driving engagement throughout the company, therefore reducing turnover costs while contributing to build a better world and future. 

How sustainability can drive engagement

In DoGood we advocate for the importance of making small but meaningful changes in our everyday life in order to find purpose and a more healthy relationship with what is around us. And we believe the workplace is the perfect environment to find that collective eagerness to make a difference.

Through our technology we help companies establish ESG impact objectives for employees in regards to the sustainability strategy of the company. We are able to activate and track employees’ impact, creating engagement that translates into improved ESG metrics, reputational value and an overall positive impact for the environment and society.

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