The Impact of Employee and Business Turnover | CoveyCS

The Impact of Employee and Business Turnover

The impact of employee turnover and business succession are not to be understated. Developing a clear strategy to retain employees and to properly prepare your business for succession, lies in the power of process improvement.

For example, some fifty percent of businesses globally have difficulty in keeping their most valued employees. While employee turnover is not unexpected, the difficulty lies in the type of employees that move on. Highly skilled, trained, and dedicated employees are not easy to find and the process of training them can take an even greater toll on your business.

Business succession is also a delicate process. The value of your business is determined by how easy it is to transfer it to new owners.

But what is the true impact of employee turnover and business succession? What are a few important strategies you can use for business succession planning that benefits you and the future owners of your business?

Impact of Employee Turnover

The Impact of Employee and Business Turnover | CoveyCS

There are three important affects of employee turnover: cost, time, and loss of product quality. Let’s look at each one individually.


The average cost of turnover and training a new employee is $57,968 for employers, according to the U.S. Bureau of Labor Statistics. For entry level employees, it’s roughly 30-50% of their total annual salary. That is a significant cost, especially for small to medium sized businesses.

Training, getting new employees on board with your complex processes, and incorporating them into your structure requires large investments that may or may not pay off. When your valued employees look elsewhere for employment, you have no choice but to pay to train new ones, but if you use outdated processes, this cost could be significantly more.

Human capital is undoubtedly the most costly and important factor in your organization. If mismanaged, your employee turnover rate can skyrocket leading you to continually pay more for the same position, again and again.


Another factor in employee turnover is time. While the cost associated with training a new employee is obviously very high, the time it takes to do so can be even more important. Pulling senior members of management from daily tasks to train and acclimate new employees to your business causes serious time deficits. 

By some estimates, it can take a new employee up to six months to fully acclimate to your business processes and integrate with your system. Not surprisingly, then, new employees are at the greatest risk of turnover during their first 12 months on the job.   Full productivity takes some 18-22 weeks.

Of course, these facts and figures are based on traditional employee onboarding strategies, without the use of advanced software systems that streamline training. Often, undocumented and unclear processes lead to errors in training, further complicating the situation.

The Impact of Employee and Business Turnover | CoveyCS

Loss of Product Quality

Despite your significant time and cost investments in training new employees, however, employee turnover could still affect your product quality. As employees leave your business, they take important institutional knowledge with them. Experience is far more valuable than training processes, but if you can find a way to document that institutional knowledge, you can reduce the damage felt from their absence.

Using a streamlined, consistent, training process can reduce product quality loss and lead to process improvement.

Impact of Business Turnover

A second hurdle many small to medium sized businesses face is business turnover or business succession. Whether due to retirement or a desire to sell your business, business turnover is a complex endeavor.

For example, if your training process is haphazard, unclear, and most of it exists in senior management’s mind’s, you will have a greater challenge to find a team ready to take on your business.

Clearly defined strategies for employee training is a great place to start if you expect business succession at some point. Process improvement across the board, yet, is an even greater investment. The first step is to identify important strategies that prepare incoming generations with the process, software, and documentation tools they need to succeed.

The Impact of Employee and Business Turnover | CoveyCS

Business succession planning should begin years before the actual deed. Failing to plan in advance could disrupt the continuity of your business. When your business is healthy, and numbers are good, is the precise time to plan for succession. Whether through retirement or through a personal decision, it is critical to create strategies today that positively affect the health of your business in the future.

Why does this matter?  Two reasons:

  • It directly affects the value of your business
  • It prevents additional stress and work when you’re ready to retire or hand your business over to a new company.

Similar to employee turnover planning, business succession planning relies on process improvement.

Strategies to Prepare for Business Succession & Employee Turnover

Invest in Good Software

Everything is automated today. New business owners will expect your business to be as well. Efficient, clearly developed, and properly managed business software can make business succession and employee turnover far less costly.

An automated business is simply more desirable to buyers than a non-automated one. Even if you aren’t planning to sell your business today, years from now you may be. When that time comes, you can be prepared if you fully automate your business.

What are the results of automating your business with premium software?

  • Easier to train new employees thanks to repeatable, consistent processes
  • Products and services have better quality as a result of that consistency
  • Automated businesses are more desirable and valuable to buyers than non-automated businesses
  • Seamless business succession for retirees
  • Easier business turnover and improved profit margins

The Impact of Employee and Business Turnover | CoveyCS

At Covey, we work with businesses to discuss real ways to reduce the impact of employee turnover and aid in process improvement by developing customized software solutions or sourcing a software to fit a businesses unique needs. Our automation and strategy consulting ensures the correct purchase, development, use, and maintenance of software that fits your needs and keeps your competitive edge.

Your business deserves a partner that strengthens it from the inside. Through intuitive consulting, powerful software updates and integrations, your business can overcome the often devastating impact of employee turnover and business succession.

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The Impact of Employee and Business Turnover | CoveyCS