It sounds paradoxical, but it's a harsh reality: when employees leave a company, costs increase—drastically. Why? Because each departure leaves more than just a vacancy; it results in the loss of knowledge, overloaded teams, and often a chain reaction. These costs are not only felt in the short term but can have long-lasting impacts across the entire organization.
In this blog post, you'll learn why turnover is one of the costliest and most underestimated risks for companies. We highlight how high turnover rates affect teams, customers, and business success, which industries are particularly affected, and the hidden costs often overlooked. You’ll also discover how companies can use Moodtalk, the smart teamwork assistant, to visualize emotional dynamics, detect early warning signs of resignation, and reduce turnover. Those who invest in team culture today gain stability, productivity, and retention tomorrow.
What to Expect in This Post
- The Curse of Turnover: What Absenteeism Does to Companies
- Industry Comparison: Turnover Rates
- The Cost of Turnover
- The Domino Effect: 4 Main Impacts of Turnover
- Overload: Increased pressure on teams
- Declining morale: Uncertainty and frustration rise
- Quality loss: Customers feel the effects
- Profit drop: The hidden financial toll
- The Way Out: A Sustainable Organizational Culture
- How Can Team Culture Be Measured and Managed?
Turnover Across Industries
The current industry comparison reveals surprising insights into employee willingness to change jobs. Leading the chart at 15.42% is the arts, entertainment, and recreation sector. Close behind are agriculture and forestry at 14.41% and retail & automotive services at 13.01%—industries often marked by low pay, few development opportunities, and weak emotional connection to employers.
Even regulated industries like energy supply (12.75%) and insurance services (12.5%) show above-average turnover, revealing that even stable sectors need to improve employee retention and leadership culture.
The health and social care sector, where turnover has long been a critical issue in nursing, reports 12.55%. This is driven by poor working conditions, emotional strain, and staff shortages.
In contrast, construction (5.57%) and information & communication (6.87%) report significantly lower turnover—likely due to better working conditions, clear career paths, stronger job identity, or active corporate culture.
Notably, nonprofits (10.51%) and real estate (10.98%) remain relatively stable—indicating that factors like purpose and job security may matter more than pay alone.
Midfield sectors include professional, scientific, and technical services (9.23%) and other business services (8.99%), where targeted retention measures are already having an impact.
The Cost of Turnover for Companies
Especially in industries where skills shortages are acute, high turnover can become an existential threat.
Example Case:
Early this year, one of Moodtalk's co-founders spoke with the CEO of a manufacturing company with 400 employees and a 20% annual turnover rate. That means 80 new hires are needed each year just to maintain workforce levels.
With average replacement costs of CHF 20,200 per person, the company incurs over CHF 1.6 million annually in turnover costs—excluding productivity losses, knowledge drain, and rising error rates.
Breakdown of Costs per Resignation:
A table in the original blog illustrates the total costs at different company sizes and turnover rates, showing just how fast expenses scale.
The Domino Effect: How Turnover Impacts Your Business
Turnover isn’t just an HR issue. It's a domino effect that leaves marks across the company—from team burnout to measurable revenue losses.
1. Overload: Increased Team Pressure
When professionals leave, remaining staff must pick up the slack. This adds stress and workload, often without immediate relief via new hires or redistribution. As a result:
- Job satisfaction drops
- Sick leave rises
Managers face additional operational duties
A Fraunhofer Institute study found overload to be a top reason for job changes—especially in high-responsibility or customer-facing roles.
2. Declining Morale: Uncertainty and Frustration
High turnover breeds anxiety. Employees wonder why others are leaving and whether their jobs are safe. Engagement drops, and teams must constantly reconfigure workflows. This:
- Increases inefficiency
- Causes project delays
Leads to lower work quality
Moodtalk continuously tracks team sentiment, enabling early identification of negative trends and addressing root causes proactively.
3. Quality Loss: Customers Notice
When staff changes frequently:
- Mistakes increase
- Deadlines are missed
- Service consistency declines
Customers quickly notice longer response times, the absence of familiar contacts, or reduced service quality. Studies show that companies with high turnover report more complaints and customer dissatisfaction. Once trust is lost, it’s hard to win back.
4. Profit Drop: Hidden Financial Impact
All of the above factors lead to lost profits. Not only are there direct costs from hiring and training, but:
- Customer satisfaction suffers
- Innovation slows down
- Knowledge is lost
New ideas take longer to implement
Instead of focusing on growth, high-turnover firms pour resources into managing their instability. The result: stagnation, lower revenues, and reduced profitability.
The Way Out: Building a Sustainable Culture
Turnover isn’t fate. Companies can act early and retain key talent through a forward-looking organizational culture.
Core Ingredients:
- Positive team culture that promotes collaboration and appreciation
- Psychological safety where employees feel valued
- Sense of belonging and purpose at work
Moodtalk visualizes team sentiment over time, making emotional dynamics and early warning signs—such as rising tensions or falling morale—measurable.
These insights are vital to proactive culture work and long-term employee retention.
How Can Team Culture Be Measured and Managed?
This is where the Smart Teamwork Assistant from Moodtalk comes in.
- Offers data-driven insights into team dynamics
Detects dissatisfaction or overload earlyProvides actionable recommendationsGoes beyond hard metrics—includes sentiment, communication, and feedback culture
Rather than merely reacting to resignations, Moodtalk enables companies to actively shape their culture and reduce turnover before it starts.
As one CHRO from the public sector put it:
"I've never received a bill for turnover."
But invisible costs are still real—and often more damaging than the visible ones.
Turnover is one of the costliest and most underestimated business risks. If companies want to be future-proof, they must:
- Recognize and measure emotional signals early
- Invest in genuine team culture
Use tools like Moodtalk to build a feedback-rich, transparent environment
Download our whitepaper to discover hands-on strategies to strengthen your team culture and prevent turnover.
Sources:
Winter, S. (2005). Mitarbeiterzufriedenheit und Kundenzufriedenheit: Eine mehrebenenanalytische Untersuchung der Zusammenhänge auf Basis multidimensionaler Zufriedenheitsmessung (By Universität Mannheim, P. Drewek, W. Bungard, I. Jöns, H. H. Bauer, & C.Homburg). https://madoc.bib.unimannheim.de/862/1/Winter.pdf
Hofmann, J., Piele, A., Piele, C., Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO, & Springel, S. (2018). NEW WORK BEST PRACTICES UND ZUKUNFTSMODELLE. In Fraunhofer-Institut Für Arbeitswirtschaft Und Organisation IAO.
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