. In low-wage settings including senior living, call centers, warehouses, retail stores, and restaurants, we have seen some companies replacing their entire frontline workforce annually, with more than 100% employee turnover. Many executives I’ve met didn’t think costs of turnover were high enough to justify higher pay—but they had never even quantified the full costs of turnover to begin with.
When pay is low, companies end up in their own vicious cycle: High turnover hurts company performance, ensuring that pay stays low and turnover stays high. Furthermore, when companies are in this cycle, they end up making many interrelated decisions that weaken their system. Managers are always fighting fires, never having enough time to hire and train well.