What Causes Employee Turnover? How Does Today’s Unprecedented Employee Churn Impact Customers Tomorrow?


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A recent quote from a business journal article about employee behavior – “The Great Resignation wasn’t created by the pandemic so much as supersized by it. The unwillingness of workers to rush back into cubicles, behind counters, onto assembly lines, and behind the wheel is a direct result of work cultures that too often default to suspicion, inflexible schedules, and unrealistic workloads. The virtual and flexible work arrangements necessitated by the pandemic were revelatory for many people, but didn’t free them from the 24/7 onslaught of tasks, back-to-back meetings, and emails created by always-on cultures and technologies.” –  encapsulates a pretty fair amount of what we are seeing and what companies are experiencing.

According to a recent report from Oracle, here are today’s principal causes of employee churn:

– Lack of Purpose – perceived lack of  meaningful or clear purpose on the part of the employer is a major cause of risk and churn, especially among Gen Z and Millennial employees 

Compensation Level/Training Availability (For Growth)  – these are connected issues, because employees view both their level of compensation and training opportunity/availability as evidence of their employer’s fairness and investment in their career

– Poor Communication And Feedback/Bad Managers/Toxic Culture –  these are connected, and they represent how the company operates, level of management capability and employees’ degree of connection/disconnection to the enterprise as a result

– Being Overworked/Boredom/Poor Work-Life Balance – collectively, these job-related issues, reflecting non-challenging work and non-supportive culture, are principal causes of stress and burnout

– Bad Hiring Procedures – we see this factor less often, because it reflects HR’s inability to consistently apply practices and procedures for identifying the best round peg/round hole candidates.  Much of the data on this factor suggests that HR is great at eliminating otherwise qualified candidates who will fit their roles within the company, but not at selecting them.  As indicated, once on board those employees who leave with under a year’s tenure have, themselves, recognized that they are not a good fit for the culture.  Note:  You may be aware that Zappos offers new hires a bounty to leave if, early on, they are not a fit for, and connected to, the organization. 

So, how does all this impact customer experience?  In addition to the well-known “hard’ costs represented by employee turnover, such as recruitment, onboarding, training, the impact on scheduling and operating practices, and the effect on productivity, there exists an array of “soft” costs, sometimes more difficult to quantify, such as impairment of company morale, which then impacts customer experience.  One of the most immediate effects is, of course, customer service (representative knowledge, rapport, etc.); however, all employees, either directly or indirectly, have linkage seats at the customer table.  

More specifically, high rates of employee turnover can result in customers feeling less valued and appreciated.  The ‘bank account’ of customer goodwill companies take pains to establish can be depleted due to losses of efficiency and productivity, increased errors, slow or non-existent problem-solving, and even failure to meet basic performance expectations. 

In the most extreme situations, employee churn can directly cause customer churn, impacting repeat business, ROI, and company reputation.  A customer who receives diminished communication or support as a result of a toxic workplace culture or overloaded employees resulting from turnover, might simply never come back.  The insufficiently-designed Titanic, at this point, has hit an iceberg and is in danger of sinking. It’s critical, then, to hire the right applicants in the first place and then create and sustain an environment where these employees can succeed, grow, and be active, committed assets for their employer. 

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.


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