fbpx

The Impact of Turnover on Small Teams

Good talent is difficult to find, particularly within the tech industry. It can be challenging to hire experienced software engineers, data analysts, user experience designers, and other professionals. Retaining that talent can be even more daunting. According to an AON survey, in Q1 2019, software companies had an average turnover rate of 21.7%.

Large tech companies deal with turnover on a regular basis. Given the shortage of experienced talent across many positions and sectors, competitors are constantly poaching employees with the promise of higher compensation and better career opportunities. However, corporations typically have the resources to manage employee turnover. Startups and tech companies with small teams can be seriously compromised by losing one or two key employees.

Turnovers Are Costly

Replacing an employee is expensive. It takes time and money to hire and train a new person. According to the Work Institute, the average cost of losing an employee ranges from 33% to 200% of their salary. When a position becomes vacant, you must pay to either post an open position on a job board or hire a recruitment agency. Then add the cost of onboarding and training the new hire. You must also compensate existing employees—or hire a freelancer—to take on the departed employee’s duties until they’re replaced. Otherwise, the work won’t get done, which will reduce productivity and incur capital costs.

Lost of Intellectual Property and Knowledge

When an employee leaves the team, they also take their knowledge and skills involving internal processes and procedures. This is especially harmful to data teams, as there will be a loss of knowledge related to data processes. The employee developed specific skills and knowledge relating to doing their job for your company. They learned how to be productive and efficient, and how to do their tasks in a specific way. If you don’t capture or store that knowledge, you’ll have to start almost from scratch in training their replacement. The associated costs of that lost knowledge might not be obvious until the employee is long gone.

Morale Can Be Compromised

On a small team, one person’s attitude can have a significant impact. The small team environment means people tend to be closer, and they’ll be more affected by what other people do. When an employee leaves, their coworkers might feel left behind and stuck in their job. With one less person doing the work, the remaining employees would have to take on extra duties, which could cause burnout. Low employee morale can create a negative atmosphere. Not only will it be difficult to attract top talent, it will become more challenging to retain your talent. Negative attitudes can sweep quickly through a small team, and might lead to a mass exodus. Ownership will have to address the issue before hiring new employees.

Service May Suffer

With the departure of an employee, and the knowledge they take with them, service may suffer. With a small team, there may be no one left who understands how to do the job, so work will be late or not done at all, and quality could decline. Team members will also be distracted from doing their tasks while trying to learn how to do the job of the departed employee. This can affect productivity, as well as customer engagement and satisfaction. Sales could decline, and the cycle of lower morale and higher stress will continue, potentially leading to more turnover.

Conclusion

Turnover can be costly and damaging to startups and companies with small teams. Your employees are essential to your company’s success. When they leave, the results can spread throughout the organization. Taking steps to attract and retain your talent will help reduce turnover and support your overall success.

Byte sized updates delivered to your inbox
  • This field is for validation purposes and should be left unchanged.