Employee Turnover: Business Impacts and Prevention Strategies

Whether referred to as the “employee turnover rate,” “staff turnover,” or “workforce turnover,” the concept remains the same—and so do its consequences. Employee turnover has become a growing concern for employers, in a context where people change jobs more frequently than in the past, and where cost control is more crucial than ever.

So how can organizations reduce their turnover rate? When is turnover considered “too high”? And should companies aim for zero turnover at all costs? Let’s break it down.

What is turnover?

Turnover is an HR metric that measures employee rotation within an organization. In other words, it shows the number of employees leaving compared with the number of new hires.

Departures can take several forms:

• voluntary resignations,
• dismissals,
• mutual terminations,
• end of fixed-term contracts,
• retirements.

Some departures are expected (e.g., retirements), some can be anticipated months in advance, and others are abrupt. Each has different causes and different impacts on teams and the company.

💡 Note: Absenteeism is not considered turnover. However, absenteeism remains a valuable indicator of workplace climate and can indirectly affect turnover.

Arrivals, on the other hand, refer to external hires. Internal mobility (an employee moving to another role or department within the company) is not counted in turnover calculations.

The impacts of employee turnover

Managing turnover is a major challenge because it affects financial health, performance, employee well-being, and even employer brand.

According to the Teale Employee Mental Health Barometer, 1 in 3 employees has considered leaving their company to protect their mental health. This reality reinforces the need to understand and manage turnover and its consequences.

Additional costs

When departures are frequent and a stable workforce is needed, recruitment becomes inevitable—and costly:

• HR teams may require reinforcements or overtime to handle recruitment, onboarding, and offboarding—or companies may have to pay recruitment agencies.
• For hard-to-fill roles, referral bonuses can work, but they are expensive.
• Depending on the circumstances of departure, severance packages and administrative costs may apply.
• New hires require training, which comes at a cost and represents a period during which they are not yet adding value.

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According  Deloitte and Maalakoff Humanis (Mental health and employers, The case for investment, Barometer 2021), mental health costs companies €3,000 per employee per year, of which €1,200 per employee per year is linked directly to turnover.

Reduced productivity

Turnover is also a driver of lower productivity. Even a qualified new hire takes time—sometimes months, sometimes years—to reach the same productivity level as experienced employees.

Meanwhile, managers and colleagues must dedicate time to onboarding, explaining processes, and answering questions—time taken away from their core work.

Periods of transition, when a position remains vacant, increase the workload of remaining employees, further reducing team efficiency.

Demotivation and instability within teams

Turnover also threatens team cohesion, trust, engagement, motivation, and well-being.

• Waves of departures can trigger anxiety and uncertainty among remaining employees.
• Losing a valued colleague can reduce morale.
• Constant team changes make it harder to build strong, lasting dynamics.

Damage to employer brand

A high turnover rate also sends a negative signal externally. Partners may view it as a sign of instability and unreliability.

And when it comes to recruitment, the risks grow: turnover undermines employer attractiveness, creating a vicious cycle. Both young talents and experienced professionals are more likely to be wary of a company unable to retain its staff.

💡 Good to know: A relatively high turnover rate is not always negative. Replacing underperforming employees with more engaged and skilled ones can benefit the company. Likewise, replacing a retiree with a younger talent can bring fresh perspectives.

How to calculate and interpret turnover

The formula is straightforward:

[(Number of departures in year N + number of arrivals in year N)/2)/Number of arrivals in year N] x 100.

This calculation is usually done annually to allow for comparisons.

In France, the average turnover rate is around 15%. A higher figure indicates significant rotation. However, interpretation must be nuanced: turnover varies greatly depending on the industry (e.g., seasonal activities), workforce age, employee tenure, and job market conditions.

How to reduce turnover

Knowing turnover is high is one thing. Reversing the trend is another. According to the Teale Employee Mental Health Barometer, 23% of employees are in a critical or at-risk mental health state—making prevention a key priority.

Understand why employees leave

The first step is to analyze the causes of departure, whether voluntary or involuntary.

Questions to explore include:

• Is compensation competitive in light of skills, experience, and market conditions?
• Does the work environment support physical and mental well-being?
• Are career development opportunities aligned with employee expectations?
• Is the company’s social climate positive? Do managers listen?
• Is work–life balance respected?
• Is recognition embedded in company culture?

Answering these questions is the foundation for reducing turnover.

Foster employee fulfillment

Salary and financial benefits matter, but retention depends on more. Companies can act at several levels to foster engagement and well-being:

• Build a cohesive, people-centered culture.
• Encourage empathetic, supportive management.
• Reduce workplace stress.
• Recognize efforts and achievements consistently.
• Provide opportunities for growth and autonomy.

At teale, we support organizations in this mission with our comprehensive mental health platform. By offering training modules, workshops, resources, and access to partner therapists, teale equips both employees and HR teams to improve well-being at work—a key driver of retention and long-term performance.