High employee turnover: the hidden cost of lost talent

Concepts like «quiet quitting», «quiet firing» and «the great resignation» have highlighted new patterns in the labour market in recent years. Why employees choose to leave an organisation is a complex question shaped by many factors — often unique to each company. Still, there are clear common denominators. Below, we outline the consequences of high employee turnover and some of the most frequent underlying causes. 

The role of high employee turnover in workplace culture, productivity and employer brand 

Replacing lost talent is both costly and resource-intensive. HR and hiring managers must invest time, budget and effort to identify needs, run often lengthy recruitment processes, and onboard new employees. One report found that the cost of losing an employee can range from several months’ salary to the equivalent of a full annual salary. Altogether, this requires a significant commitment — with financial and operational consequences for the organisation. 

When an experienced colleague leaves, team productivity often drops. Valuable employees hold expertise and organisational knowledge that can be difficult to replace. If the departing employee is particularly hard to substitute, this can lead to imbalance in workload, reduced quality in products or services, and increased stress among remaining team members. Team morale and collaboration may also suffer, placing added pressure on leadership. Over time, these ripple effects can weaken the organisation’s competitiveness and ability to adapt to industry changes. 

High turnover can further signal that the company is not an attractive or stable workplace, damaging the employer brand and reputation among both potential employees and customers. 

A recent survey shows that more Swedes than usual plan to change jobs this year. Poor working environments are a major cause of dissatisfaction, and one quarter report being unhappy with the company culture, leadership or their manager. 

Why do employees leave? 

To reduce turnover, it is crucial to understand the factors driving employees to seek opportunities elsewhere. Below are some of the most common reasons talent chooses to move on. 

Ineffective leadership 

Leadership plays a defining role in employee retention. Leaders who are disengaged, unsupportive or who communicate poorly can create an unfavourable work environment where motivation and initiative suffer. Lack of constructive feedback or guidance is directly linked to employees choosing to leave the organisation. 

Lack of career opportunities and development 

A major reason for low job satisfaction is insufficient access to growth opportunities — such as skill development, job rotation or increased responsibility. Roles that fail to offer development can leave employees feeling overlooked or treated unfairly. 

Work environment and wellbeing 

Psychological safety is a critical factor in employee retention. When employees do not feel safe expressing their thoughts or ideas without fear of negative consequences, a dysfunctional work environment can develop. Employees who feel psychologically unsafe often struggle to fully engage in their work, which may lead to increased stress and poorer health. Ultimately, a workplace where individuals cannot be themselves becomes a powerful driver for seeking a new employer. 

These three factors are not the only contributors to turnover, but they are among the most common and influential. Actively improving leadership and employee engagement is essential to retaining talent and reducing turnover in the long term. 

Sources

Workspace Recruit’s Recruitment Report 

 Simployer Puls 2023