High Employee Turnover

What does high employee turnover mean?

High employee turnover is referred to the number of employees who leave the company.

The negative effect of turnover is that it is one of the most expensive and difficult workforce challenges. According to Porter (2011), 'employee turnover can cost a company substantial amount of capital when considering downtime, recruiting, interviewing, orientation, training, and ramp-up time'.

While cost is undoubtedly an important factor, research has documented turnover can have a negative effect on different outcomes. An article called "Worker Turnover Hurts Customer Service, Study Shows" by George Lowery he cited John Hausknecht (Assistant Professor of Human Resource Studies at Cornell University's ILR School) and his two colleagues stated that employee turnover can harm the quality and customer service in companies.

In "The Negative Effect and Consequences of Employee Turnover and Retention on the Organization and Its Staff", Kemal M. Surji (2013) mentioned 'competitive advantage will be compromised once quality and customer service fall short which in turn influences the risk of the loss of long-term customer relation and contracts in the industry'.

But turnover can be positive in some situations. For instance, according to Edward E. Lawler III, if a underperforming employee leaves, it may end up saving the company more money than it would cost to replace that employee. Therefore, he pointed out that not all turnover should be avoided.

Definition of employee turnover

Employee turnover is the rotation number or percentage of employees who have left the company and have to be replaced by new employees.

Turnover can be seen as either voluntarily or involuntarily. Voluntary turnover is when an employee leave the company by choice (i.e. quits or resigns), and involuntary is when the management decided for the employee to leave the company (i.e. fired).  

Return to Glossary of business failures or read "High Operational Cost".

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Last edited on 6 January 2022.