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TCV Insights

The Impact of Employee Turnover

By J. Gary McDaniel, TCV Growth Partner -

A small amount of turnover is normal. Factors such as retirement and health-related issues play a natural role in employee turnover. Other reasons for turnover include low pay, a lack of opportunities for advancement, job dissatisfaction, and feeling disrespected, while some leave because they are marrying, going back to school, or migrating to another city or country. However, turnover is becoming more and more common and people are leaving their jobs in record numbers. According to the July 2022 Bureau of Labor Statistics report, 4.3 million people quit their jobs while 1.4 million were laid off. These are not insignificant numbers. Therefore, organizations need to learn how to deal more effectively with this growing phenomenon to survive. Why? Employee turnover is detrimental to your business in many ways.


The cost of replacing a departing employee can be staggering – in some cases the equivalent of a full year’s salary. Sourcing, landing, onboarding, and training costs are substantial, and those investments of time and energy are lost along with the employee’s knowledge and expertise.

Team Impact

The impact of employee turnover is most often felt at the team level. This can cause ripple effects in different parts of your business. For example, the remaining team, at least initially, must absorb their departing team member’s workload. This can lead to a decline in productivity, as the team struggles to manage their previous duties on top of their new responsibilities.

Team Morale

Losing employees often hurts the company’s culture and morale. A strong company culture boosts employee morale and encourages people to genuinely work with one another. But when an employee leaves, this can cause shifts within the team especially if the connections were great. Connections are very powerful and connections at work matter. When employees aren’t connected to others in the workplace, it is always the business that suffers. Recent data shows that employees without connections have a 331% stronger intention to quit. When employees quit, it can negatively impact your company’s culture, and cause tension, stress, and uncertainty among your employees.

What to do?

In sales, the saying goes “it is cheaper to keep a customer than to get a new one”. The same can be said for employees, especially good ones!

As discussed, high employee turnover creates a cascade of negative effects. Departing employees take with them acquired knowledge and specific expertise. And, the void left behind can be difficult to fill with existing staff. If an organization is struggling with high employee turnover, it’s critical to create and implement a retention strategy that addresses the key issues causing employees to leave. Some of these include:

  • Hire the right people for the job. Don’t hire just to hire. Warm bodies don’t really do you much good.

  • Offer competitive salaries and packages. Higher salaries may be difficult, but consider the cost of turnover vs. the cost of retention. That higher salary might be a cheaper in the long run! Benefits can also be tailored to an employee’s needs, rather than offering a one-size-fits all approach.

  • Ensure the workload is fair.

  • Get to know your employees…and get them to know each other.

  • Make your employees feel respected and trusted.

  • Recognize and celebrate success.

  • Nurture organization traditions.

  • Offer professional development opportunities.

  • Clearly communicate paths to career advancement.

Progressive companies are also changing their cultures to retain top talent. At the top of this list is making work/life balance a priority and offering flexible work options. For example, a study of organizations that had wellness programs in place reported that 69% of the participants felt increased engagement at work.

Bottom line - Once employee engagement, company culture, and employee morale suffer, so does productivity. You will start to see things like increased burnout, a deteriorating employee experience, and even more turnover. It becomes a snowball effect, leading to poor business performance. Whatever the reason, high turnover comes with a high price tag and needs to be addressed.


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