If turnover is high, what is likely to happen in a business?

If turnover is high, what is likely to happen in a business?

• A. Lower recruitment costs
• B. Higher staff morale
• C. Increased profits
• D. Higher recruitment, selection and training costs

Answer: (D)

When turnover is high, more staff are leaving and must be replaced. That means the business has to recruit new employees more often, which brings recruitment costs—advertising, agency fees, time spent by managers and HR, etc.—and the process of selecting the right people adds selection costs. In addition, each new hire needs training and induction, adding training costs. Because these costs occur repeatedly as turnover continues, total expenses rise. While high turnover can also dampen morale and reduce profits over time due to disruption and higher costs, the most direct and consistently expected outcome is a rise in recruitment, selection and training costs.

When turnover is high, more staff are leaving and must be replaced. That means the business has to recruit new employees more often, which brings recruitment costs—advertising, agency fees, time spent by managers and HR, etc.—and the process of selecting the right people adds selection costs. In addition, each new hire needs training and induction, adding training costs. Because these costs occur repeatedly as turnover continues, total expenses rise. While high turnover can also dampen morale and reduce profits over time due to disruption and higher costs, the most direct and consistently expected outcome is a rise in recruitment, selection and training costs.