Low Employee Turnover Rate Provides Advantages For Workplace Morale


The employee turnover rate of a business refers to the rate at which employees are replaced during a period of time. Whether they are fired or they leave their position voluntarily, a constant stream of employees coming and going can have a negative impact on your business. However, a low turnover rate could have many benefits. To learn more about how having a lower turnover rate can benefit your business keep reading below.

Calculating Turnover Rate

In order to determine a business’s turnover rate, also known as employee retention ratio, you must know the turnover rate equation. To calculate turnover, take the number of separations during a given month and divide that figure by the average number of company employees. Then, multiply the result by 100. It should look like this:

  • Turnover Rate = (Monthly # of Separations/Avg. # of Employees) x 100

Once you have determined your business’s turnover rate, you can work to improve it. Or, if you have a low turnover rate, you can experience some of these benefits below.


One of the most important impacts a high turnover rate could have on a business is through cost. Recruitment and training are expensive endeavors that can add up each time you lose another employee. The price of hiring a new employee can be significant, as can the cost of firing one. Administrative costs, which can include employee orientation, health-care notifications and paycheck discontinuance are only half of the battle. You must also consider the time wasted. Time that could have been used productively will now go to completing interviews and filing new employee paperwork. By lowering your company’s turnover rate you could actually be saving money.


It is important to note the effects of turnover on your employees. Having a consistent group of workers will allow your employees to form professional relationships, work collaboratively on long-term projects and develop a sense of unity. These are important workplace benefits. A high turnover rate can often lead your employees to believe that they are replaceable. By lowering your company’s turnover rate, you are sending a message to your employees that they are valued. The idea that their contributions matter and are needed can greatly improve the morale of your company. If you find that your business is struggling due to a lack of productivity or enthusiasm, take a look at your turnover rate and see if that may be the problem.


Similar to cost, a lower turnover rate can often mean more productivity. That is always good for business. The time spent finding new employees to do a job can put a wrench in important projects. With a lower turnover rate, you are likely to see a more productive staff.The cost that comes with training new employees also involves a drop in productivity during their adjustment period. Keeping around employees who are used to the business process and comfortable with the tasks at hand is essential to maintaining an efficient work environment.


Consistency is not only good for productivity. If your company works directly with specific clients, a high employee turnover rate could lose you business. Your clients form relationships with specific employees. If you have people constantly coming in and out of a position, those clients will no longer feel attached to your business. In fact, they may follow one of your employees to a new firm. This may even cause venture capital firms to turn you away if you are looking for funding. Keeping employee turnover rates low allows your clients and employees to bond with one another, which keeps them tied to your business.

Having a low turnover rate can save you from the many pitfalls of losing employees. Rather than pay the cost of a new employee, make sure that you are providing your best workers with the incentives they need to stay with your business. A lower turnover rate can mean a happier work environment, happier clients, and a more productive business.

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