5 Ways Employee Turnover Can Impact Your Small Business
Employee turnover is the percentage of employees who leave
your company and are replaced by new employees during a specified time period.
You wish you could just hire the best employees, who would then stay with your company for their entire career. But, it doesn’t work that way, unfortunately. Some turnover is unavoidable.
But, knowing what your turnover is can help you figure out what’s
causing it, so you can decrease it.
How to Calculate Turnover
To calculate employee turnover, divide the number of
employees who left your company by the number of employees you had at the
beginning of the period.
For example, let’s say you started your quarter with 10
employees. During the quarter 2 people quit or were fired. Your employee
turnover for the quarter would be 2/10 or 20%.
Types of Employee Turnover
There are two types of employee turnover – voluntary and
Voluntary turnover is when an employee quits or resigns.
You can help reduce voluntary turnover by conducting exit interviewsto find out why employees are leaving. You can also conduct stay interviewsto check in with your current employees and find out what they like and dislike about working for your small business.
You can help reduce involuntary turnover by taking your time during the hiring process to hire people who are a cultural fitand will be able to meet and exceed their goals.
Ways Employee Turnover Impacts Your Small Business
Employee turnover isn’t necessarily a bad thing – an employee who wasn’t a cultural fit but decided to leave on their own lets you fill their position with someone who will fit into your company better. Or, you might have to fire someone who isn’t as productive as they needed to be.
But, any employee turnover will impact your small business
in some way.
1. It costs you a lot of money
When someone leaves your small business, it could cost you between
90% and 200% of their salary to replace them.
You might have to continue to pay their benefits for a little while, or you might have to pay them some severance. You’ll also have to spend money on job ads to hire their replacement.
2. It affects employee morale
If a lot of your employees start to leave your company,
morale is already pretty low. But, the turnover will cause your remaining
employees’ morale to drop even lower, causing them to eventually quit. It can
be a vicious cycle.
3. It causes a loss of productivity and performance
Your company will also lose productivity while you’re
looking for a replacement because your remaining employees will have to pick up
some of your former employee’s tasks and responsibilities, in addition to their
4. It costs you time
When an employee leaves your company, it can cost you a lot
of time because you have to
The personality of your new hire can drastically change how
your small business team works together – it could be a bad change or a good
change. Unfortunately, you won’t know for sure until your new hire starts