Effects of employee turnover on profitability

In order to make profits, a company depends heavily on its employees. It therefore invests heavily on employee training and certification. This may however impact negatively on the business in instances where the company only retains its employees over short periods of time. Companies incur huge costs in getting another employee of similar capacity and also incur cost in onboarding and orientation. The cost of turnover calculator determines the cost of position coverage before a new employee comes, cost of filling in the new position and the productivity gap cost before the new employee becomes efficient.

While these cost may not appear in the company books of account, they have a significant impact on the business. Companies that employ incompetent staff, may lose customers through poor services offered by the new staff. Some customers may also leave as a result of lost relationship with the exiting staff. Most businesses run on relationships built and a change inthis area may lead to huge losses.  Where a new staff has been employed, they must be given enough time to familiarize with the culture of the organizations and the day-to-day activities of the business. Their productivity is minimal and could have significant impact on the business especially where they are required to do manual work.

Managers are held accountable for the retention and management of their employees. This encourages good relationships between employees and their managers improving the general outlook of the whole organization.


  • Be a brand they are proud of

Ensure that the brand your company represents is one that your employees are proud of. It is crucial to have your employees connect with the core values of your business. When employees feel that are fulfilling a bigger purpose than themselves, they are more likely to stay for a longer time.

  • Reduce employee pain

Identify areas of concerns from your employees. When employees feel that their concerns are heard, they are more likely to focus on the issues of the business. They will equally protect the company’s image as they know their concerns will be addressed.

  • Have leaders and not bosses. Most employees leave their bosses and not their jobs. It is crucial to have leaders who lead by their actions and not boss everyone around.