Employee turnover impacts business success and retention

Employee turnover serves as a critical metric for business success, particularly within the consulting sector. Economist Dirk Lippold notes that when qualified staff leave, companies lose not only labor but also institutional knowledge, experience, and client relationships, alongside the costs of recruitment and training.

While the turnover rate—calculated by dividing departures by the average number of employees—is a key management indicator, its significance depends on industry standards and company size. For example, consulting firms with rotating project teams naturally experience different turnover patterns than insurance companies.

Beyond economic metrics, retention is deeply tied to leadership and psychological contracts. Katrin Muhr, Senior HR Director at Bitpanda, argues that resignations are often the result of a long-term process rather than a single event. She emphasizes that employees operate under two contracts: the formal employment agreement and a psychological one based on unwritten expectations. When companies fail to deliver on promises regarding professional development or influence, it creates a breach of trust that eventually leads to departures.