A high turnover rate is one of the worst things that can happen to your company, in more ways than you’d think. It’s not just about the bottom line—the effects reach far beyond that. In fact, high turnover can affect every aspect of a business, and its ripple effects of it are often hard to predict.

Here are some ways that a high employee turnover rate can negatively affect your company.

1) Loss of productivity: If an employee leaves for any reason, it often takes some time before the replacement is hired and trained to be fully productive. During this transition period, there is a loss of productivity which can lead to lost revenue.

2) Loss of knowledge: Especially when employees leave who have been with the company for a significant amount of time, their departure can take with them important knowledge and information that they acquired while they were working there. The new hire will obviously not have access to this type of information until they become more familiar with the company and gain that same knowledge over time.

3) Loss of morale: When people are constantly leaving, it can bring down morale among remaining employees because they might wonder what kind of future lies ahead for them in terms of job security. This negative feeling can also cut into employee productivity and efficiency.

4) Loss of customers: When customers become familiar with your business and get to know your employees, they develop relationships with them that make them feel comfortable doing.

5) It costs time and money to recruit.  From writing the job ad to reading applications, interviewing and making decisions on who to hire, as well as investing time to train them, it is a very costly exercise.

Over the past 4 years at Northwest Accountancy we have had a staff turnover of more than 2 times our staff (now sitting at 11).  Some were due to relocation, others due to no longer fitting with the expectations of the business, and others because the pressures and deadlines of tax are more taxing than they realised.

Here are some of the things we have learned:

1. People are replaceable, and where someone thinks they have a hold over the business they don't share information and tend to hold onto work thinking that no one else can do it, and therefore don't want to take holidays either.  Keep an eye out for staff who don't share what they know about their job or their clients.  Encourage them to teach by asking them to host a group training session, and give them the opportunity to share what they know, and feel valued.

2. Having written and videoed procedures have made a huge difference to productivity when new employees start.  We used to have staff who didn't want to document what they did because it was boring... or because they knew deep down that they weren't the most efficient at their job as they liked to wing it and just get stuff done.  By making job procedures for each role, it has made it easier to hand over information, and tweak things so that there is one most efficient way of doing things, ensuring that each staff member knows what they are doing on a day-to-day basis, but also enabling them to go on holidays regularly because other team members can take over easily, with minimal training.

3. We have lost a few customers along the way, but we have also pleased a few customers who may have had bad service from a previous employee.  The fact that our replacement employees have stepped up and provided a better service makes us proud, and by learning what we can do to improve our customer's experiences along the way, we are trying to do that.

4. A bad egg makes the whole carton stink.  On the odd occasion where we have had someone in the business who doesn't fit, it has made coming to work awkward and hard work for most team members.  We have tried both methods - cut our losses and ask the employee to leave, and try to give them the resources and support they need to improve - and both methods have resulted in the employees leaving.  We know now that when something's wrong, to address it straight away, and the rest of the team in the office becomes more relaxed and happier to come to work.

5. Being flexible is the best thing we can do for our business.  No-one in our business works a standard 9-5 week, and not just because our office hours are 8.30-4.30!  By moving roles around when people leave or want to decrease or increase their hours, we have the opportunity to give our team members a chance to try something new, to see where their strengths lie and really work with that.  We have flexible hours, a flexible workplace and the chance to change work hours every quarter, to "flex" with the season.

6. Outsourcing some of the roles of the business has helped to stabilise our business.  In a remote area, when hiring for a "bricks and mortar" business, you are limited to the people who live in the immediate area.  However, when you outsource some of the tasks, you can get people who are well qualified, and who need little to no training in their area of expertise.  Time taken to find the right person can be outsourced too, if you use an agency, and the downtime can be minimal.

Although it breaks my heart to see so many people's names on our employee list, I know that each time we choose a new staff member to replace one who has gone, we have been intentional about it.  We know what skills, what values and what sense of humour the employee needs (we are accountants!), so that we can pick the right one quickly, that we know will easily fit into our business.  I truly believe that if you pick the right employees your staff turnover decreases again, and your business is so much better for it.