One of the major challenges facing businesses is significant employee movement and high staff turnover.
Companies that recognise that the time and resources invested in employee training not only support professional development but can also be an effective tool for reducing turnover may gain a significant advantage over their competitors. In this blog post, we examine the damage high turnover can cause a company and how employee training can contribute to staff retention.
How does staff turnover cause losses for a company?
Employee turnover can cause losses for a company in several areas. Let us look at a few examples!
Recruitment and hiring costs increase
The more employees need to be replaced, the higher the company’s expenditure. The cost of replacing a single employee—including job advertisements, recruitment fees, time spent screening and interviewing candidates, and of course onboarding and training new employees—can amount to millions of forints.
Training and development costs increase
When an employee leaves, the money invested in their training and development is essentially lost. Strategically minded companies devote significant resources to training programmes to maintain and develop employee skills and productivity. When turnover occurs, these investments do not generate the expected return, and additional resources must be allocated to training new employees.
Productivity declines
Employee turnover can cause a temporary decline in productivity while newly hired colleagues go through the learning process and fully master their tasks or become capable of taking on the responsibilities of the role. Research suggests that it can take up to six months for a new employee to reach the same productivity level as their predecessor. During this transition period, the company may experience inefficiencies, errors, and missed opportunities, all of which can have financial consequences.
Organisational knowledge is lost
Experienced employees make valuable contributions to accumulated organisational knowledge and expertise, which often provide a competitive advantage. When they leave, this knowledge may be lost or significantly reduced, creating gaps in operations, decision-making, and customer service. Rebuilding this knowledge base can be time-consuming and costly for the company.
Negative impact on customer satisfaction
High turnover rates can negatively affect customer relationships and satisfaction. Customers may experience disruptions in service quality and may also be frustrated, for example, by frequent changes in their contact persons. Research indicates that customer churn generally increases in organisations with high employee turnover. This naturally leads to lost revenue and damage to the company’s reputation.
Training as a solution
As the above shows, turnover can impose significant financial burdens on companies, affecting profitability, competitiveness, and long-term sustainability. Strategically managed employers therefore often seek to introduce methods aimed at reducing turnover and retaining talent in order to mitigate these financial losses. Let us look at the positive effects training can have on employees.
1. It increases engagement and loyalty
Employees who feel that their company is invested in developing and supporting them are more likely to stay. Training therefore develops not only their professional skills but also their commitment and loyalty to the company.
2. It provides career-development opportunities
Career-development opportunities can be extremely motivating for employees. Companies that recognise and support employee development can also retain people with strong ambitions.
3. It increases employees’ market value
Training provided by companies can improve employees’ marketability. As a result, employees become more valuable and are motivated to remain with the company in the long term because they feel they are developing professionally. Of course, another company may still entice them away, but this is where the classic story is worth mentioning.
Two company managers are talking.
– Aren't you afraid of training your people so much that the competition poaches them? – asks one of them.
The other replies: – The real problem is not training them and having them leave, but not training them and having them stay…
4. It supports mental well-being
Supporting employees’ mental well-being is important for reducing turnover. Training opportunities support not only professional but also personal development, contributing to employees’ well-being, satisfaction, mental health, and balance.
5. It enables better internal communication and cooperation
Training participants are often colleagues working in different departments or areas. Joint training sessions and workshops create excellent opportunities to strengthen internal communication and cooperation, contributing to an improved workplace culture.
Closing thoughts
Employee training supports not only staff development but also reduced turnover. Companies committed to developing their employees not only prepare them professionally for changing market needs, but also strengthen their engagement and loyalty. Employee satisfaction and development are therefore directly linked to companies’ long-term success and stable operation.
In the next part…
Next time, we will discuss why it is worth starting to learn even as an adult and the individual benefits of lifelong learning.
