SalesSpire Blog

The Real Impact of Voluntary Turnover

Nov 1, 2017 10:32:00 AM / by Bill Waham

voluntary turnover.jpgWant proof the economy is back on the upswing? Well, listen to HR managers and senior executives in nearly every industry these days and one of the first business matters they'll mention is a concern about employee retention and voluntary turnover.

With competition for quality employees beginning to really heat up, supervisors and top administrators are definitely aware of the inconvenience of employee turnover. What many are missing, though, is the ripple effect tenured employees choosing to leave have on one of every enterprise's main preoccupations: costs.

The Real Cost of Losing an Employee

Research into the causes and overall impact of voluntary turnover in experienced staff has yielded results that, at first, seem to be disjointed. But dig a little deeper and some common elements among nearly all of these studies begin to leap out at you.

Deloitte -affiliated analysts have been able to drill down through the mass of data to unearth some of the principal costs businesses incur due to experienced employees voluntarily choosing to leave a company. The surprising conclusions include:

  • Costs associated with advertising a vacant position
  • Outlays involved in interviewing prospective replacements - which can include travel, meals, lodging, rental cars, etc.
  • Expenditures of hiring - which include redirecting existing resources to training and getting the new employee up to speed in their new job and the culture of your enterprise
  • Loss of productivity - since it may take your new employee as long as two years to begin performing at the level of the experienced person they're replacing

It's pretty easy to see that voluntary turnover in seasoned employees isn't just a simple matter of bringing a new person on board.

The fact is, your company may spend more on their replacement for a considerable period of time before that metric begins to turn around in your favor.

The Effect on Morale

Of course, not all costs associated with voluntary turnover show up on a spreadsheet. Some, while a little less tangible, are nonetheless just as costly in the long run, even if they are somewhat more difficult to quantify.

Consider for example:

  • Cultural effects and team dynamics – not only do other employees both notice and ask why a valued colleague chose to leave – they also begin to wonder if maybe they're missing out on better opportunities themselves
  • Erosion of employee engagement – it's just a fact of life that employees that are questioning why people are leaving - and whether they should join in - are less committed to what's right in front of them, namely – their job
  • Reduced effectivenessall of the above considerations tend to bleed over into how your company handles service concerns at every level. And that usually results in a noticeably less responsive interaction with your primary area of concern, the customer

In other words, the real costs of voluntary turnover truly are like a giant iceberg. The part you first notice is much less than the whole. And that illuminates the importance of having a strategy to address employee retention in the first place.

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Topics: employee retention, voluntary turnover, team dynamics, risk mitigation

Bill Waham

Written by Bill Waham

Bill founded SalesSpire after a successful career in sales spanning more than 35 years. During this time he never missed a sales target and ran a $2.5 billion sales organization with incredible results. His teams saw a rate of voluntary turnover of less than 1% and the highest customer satisfaction scores in their class. His expertise is not theoretical—it is a lived experience. Before his career in sales, Bill served in the Marine Corps and earned a BS in computer science via the GI Bill.