Impact of Employee Turnover on Companies: Problems and Solutions

This essay discusses the negative impact of employee turnover on companies and provides potential solutions to overcome the problems faced by companies. It covers the impact of turnover on revenue, workplace morale, product or service quality, and marketing return. The suggested solutions include performance appraisal, good work culture, maintaining good employee relationship, and increasing employee engagement.

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Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
Problems faced by companies ....................................................................................................3
Solution ......................................................................................................................................4
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Employee turnover can be described as total number of worker who are leaving company over
specific period of time. It consist those people who exit organisation as well as employees who
are fired as well as laid off from organisation. Increasing employee turnover is a problems for an
organisation as it create various negative impact over company (Arachchi and Dahanayake,
2020). There are various reason for which people leave organisation and it is a situation which is
unavoidable for company. Employee organisation due to lack of growth and progression
opportunity in an organisation as an individual is always looking for growth opportunities.
Increasing work burden over employees also make them dissatisfied due to which they leave the
organisation. Lack of performance feedback as well as recognition is also make an employees
dissatisfied as a person require recognition and rewards in order to get opportunity. If
organisation does not include employees for process of decision making will make them
dissatisfied. It will prevent them from from getting success due to which they will leave
organisation. Due to all these reason employee will leave organisation that will create negative
impact over performance of company. This essay includes discussion of business problems cause
through high turnover of staff as well as provide potential suggestion to a person.
TASK
Problems faced by companies
There are various problems faced by companies due to increasing turnover. Human resources are
considered as an asset of company and if company is loosing these people, it can create impact
over companies (Yingjie, Deng and Pan, 2019). Some of problem faced by companies due to
increasing turnover are mentioned below:
Turnover on revenue and low workplace morale:
Employee turnover is creating negative impact over revenue as well as profitability of company.
For instance, according to a study, it is identified that cost of company for losing an employee
earning is of $8 for an hour in retail chain. There are also some other cost associated with this
including hiring of new employees, training of employees, lower productivity, lost sales and
others. It create impact over revenue of a person that is depended on industry wages and position
of employees (Zhang and Li, 2020). There are different package is offered to employees which
create expense for company as there is no return on investment for some time. Management also

consider some other cost like labour cost in planing ads, review of application, interview as well
as training. There are some other organisation which are also utilising job placement service that
is also considered as expense and also some expense are related to lost of productivity. Existing
employees who have work experience are more productive for a firm in compare to employees
who are new and does not have work experience (Dobrosavljević and Urošević, 2021). In order
to trained them, company needs to provide them proper training and development opportunities.
High turnover rate of a company can also results into decreasing employee morale. It may reduce
productivity of company and also increase work load in organisation. New employees of a
company cannot be immune and suffer from low morale an needs to be struggle for leaning new
procedure, duties as well as responsibilities.
Impact over product or service quality and reduce marketing return
With increasing turnover of employees, productivity of organisation has also reduced. It create
disruption in daily operation of organisation as number of employees of organisation has also
reduced. Due to which company needs to hire new employees who does not have work
experience and without proper training and development opportunity, these can create impact
over quality of products and service (Kim, Su and Wright, 2018). It is more important in some
industries where repetition as well as comfort is players important role in innovation of
organisation. New employees are not that efficient and productive for company which can create
impact over quality of products and service. Due to this quality difference, image of company
can also be affected among customers. It can also results in negative impact over sales of
products of company. In situation where marketing expenses of company for purpose of
attracting new customers can be consistent, return of investment is also lower as company is
losing their customers. It is the result of lower quality of products and inexperienced staff that
will increase cost of customers. It is also not good situation for lowering marketing return.
Solution
There are different types of problems faced by a company due to increasing employee turnover
as it create impact over quality of product, profitability marketing share, productivity of
organisation. It is important an organisation to overcome impact of these and for this they can
develop different types of strategies in their organisation (Malek, Kline and DiPietro, 2018).
There are various strategies adopted by companies for overcome of these problems faced by
organisation. These strategies in context of company is mentioned below:

Performance appraisal: Performance appraisal can be described as systematic evaluation for
performance of employees that provide understanding ability to a person for purpose of future
growth as well as development. It can be done in effective manner by measuring pay of
employees by supervisor and compare it with plans as well as targets. There are different factors
to be analyse by supervisor for purpose of managing performance of employees. Employers are
maintaining good position of employees in order to manage performance. With adoption of it,
company can offer promotion opportunity to employees who are giving their best (Moore,
Dishman and Fick, 2021). Organisation can also offer compensate to employees who work hard
and provide additional benefit to company. It is an important strategy that motivate employees to
work in effective manner and work with company for long period of time. An employees leave
an organisation due to various reason and among these, one of reason is limited pay, through
performance appraisal, organisation can increase pay of employees who are performing their job
role dedicatedly. It will provide opportunity to company to retain their employees. It is a positive
method that is adopted by company for retaining employees and also for improving their
performance. It is good for productivity and return on investment of company.
Good work culture and maintaining good employee relationship: Work culture is one of
important element that is consider by an employees before joining an organisation or leaving an
organisation. It can be described as collection of beliefs, behaviour as well as attitude of
employees in regular atmosphere in working environment of company. Positive work culture
align employees with company policies that allow them to attain goals of company along with
considering well being of individual. A business can adopt this strategy for purpose of retaining
their employees. They can offer them development opportunity which are important (Weis and
Rosendale, 2019). Prioritising employees for different activities and including them in decision
making process of companies. It is also important for an organisation to maintain good employee
relationship as it allow them for purpose of retaining employees, As organisation can do so by
involving employees in decision making process that allow company to take valuable suggestion
from employees that is important for growth of companies. Maintaining positive relationship
with employees make employee loyal for companies and also prevent them from going to other
organisation. It is important as it motivate employees to give their best which will improve
productivity of company and also improve quality of their products and service

CONCLUSION
From above mentioned project report, it can be concluded that employee turnover is one of major
problem for an organisation as it create various negative impact over a company. Increasing
employees turnover indicate situation where employee are leaving organisation that results in
negative situation for company. In order to overcome of it, company needs to hire new
employees but these employees are not that efficient. They does not have work experience and in
order to make them capable, company needs to provide them proper training and development
opportunities. It is essential for an organisation to overcome of these problems and for this, they
are adopting different types of strategies. These strategies can be including building positive
relationship with employees, developing positive work culture, performance appraisal, increasing
employee engagement and others. All these strategies will create positive motivation among
employees that is essential for them and also make them capable. It will allow employees to
contribute towards growth of company that provide them success and growth in market. These
strategies are important for company as it allow them for purpose of getting growth and provide
them opportunity to increase return on investment.

REFERENCES
Books and Journals
Arachchi, W.K.H. and Dahanayake, S.N.S., 2020. Impact of human resource management
practices on turnover intention of housekeeping employees in hotels in Anuradhapura.
Dobrosavljević, A. and Urošević, S., 2021. Research of the Influence of CSR Dimensions
Integration in Business Processes on the Reduction of the Employee Turnover in
Apparel Industry Organizations Using AHP and TOPSIS Methods. Engineering
Management Journal, pp.1-12.
Kim, S., Su, Z.X. and Wright, P.M., 2018. The “HR–line‐connecting HRM system” and its
effects on employee turnover. Human Resource Management, 57(5), pp.1219-1231.
Malek, K., Kline, S.F. and DiPietro, R., 2018. The impact of manager training on employee
turnover intentions. Journal of Hospitality and Tourism Insights.
Moore, H., Dishman, L. and Fick, J., 2021. The Challenge of Employee Retention in Medical
Practices across the United States: An Exploratory Investigation Into the Relationship
between Operational Succession Planning and Employee Turnover. In The
Contributions of Health Care Management to Grand Health Care Challenges. Emerald
Publishing Limited.
Weis, A. and Rosendale, J.A., 2019. Determinants of retention in the hospitality industry: A
study of employee turnover statistics in a private Pennsylvania club. JOHAR, 14(1),
p.57.
Yingjie, L., Deng, S. and Pan, T., 2019. Does usage of enterprise social media affect employee
turnover? Empirical evidence from Chinese companies. Internet Research.
Zhang, T. and Li, B., 2020. Job crafting and turnover intention: The mediating role of work
engagement and job satisfaction. Social Behavior and Personality: an international
journal, 48(2), pp.1-9.
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