Employee Turnover is Expensive but Retention Without Engagement is Even Worse

Today, we’re tackling a topic that every business leader and HR professional needs to understand—employee turnover is expensive, but retention without engagement can be an even bigger problem. Last week we talked about how expensive recruiting without retention can be. This week, we’re taking it a step further, because employee turnover is very expensive, but retention without engagement can be even worse.

Updated March 3, 2025.

Many businesses pour resources into reducing turnover, thinking that simply keeping employees on board is the goal. But what happens when those employees stay… but they’ve mentally checked out?

The Cost of Employee Turnover

Let’s start with the obvious: turnover is expensive! I shared this last week: According to various studies, replacing an employee can cost anywhere from 50% to 200% of their annual salary. Why? Because turnover isn’t just about filling an empty seat—it’s about lost productivity, hiring and training costs, the impact on team morale, lost revenue, lost opportunities, and so much more.

• Recruiting and Hiring: Finding, vetting, and onboarding new employees requires time and money, and that investment is lost if the employee leaves shortly after.
• Training and Productivity Loss: New hires take months to reach full productivity, leaving gaps in performance that can impact business results.
• Customer and Team Disruptions: High turnover affects service quality and can shake customer confidence, leading to loss of business.
• Culture and Morale Impact: Employees seeing their colleagues leave might start questioning their own future at the company, causing widespread disengagement.
• Reputational Damage: Frequent turnover can harm your company’s employer brand, making it harder to attract top talent in the future.

So yes, employee turnover is a massive expense. But let’s flip the script—what happens when you successfully retain employees who aren’t engaged?

When the wrong hire hurts more than turnover.

The Dangers of Retaining Disengaged Employees

You might think, “Well, at least we’re not losing people!” But keeping employees who aren’t engaged can be even more damaging than high turnover. A disengaged workforce can drain your company’s energy, slow down innovation, and negatively impact customer satisfaction.

Here’s why disengaged employees are dangerous:

• Low Productivity: Disengaged employees do the bare minimum, leading to inefficiency and profitability loss.
• Toxic Culture: Negative attitudes from disengaged employees can spread, bringing down overall team morale.
• Missed Innovation and Growth: Engaged employees drive improvements and bring new ideas, but disengaged employees tend to stick to the status quo.
• Customer Experience Suffers: If employees don’t care about their work, that lack of enthusiasm will be felt by customers, leading to dissatisfaction and decreased loyalty.
• Increased Workplace Conflict: Disengaged employees are more likely to clash with colleagues, leading to unnecessary workplace drama.

Think about it—if you had to choose between a constantly rotating door of employees or a workforce that’s physically present but mentally absent, which is the bigger risk?

Fortunately, it doesn’t have to be an either-or situation. You can retain employees while also keeping them engaged.

How to Retain AND Engage Employees

So, what’s the solution? It’s not just about keeping employees—it’s about keeping them engaged and invested in their work. Here are four key strategies to make that happen:

1. Give Employees a Purpose

• Employees need to see how their work contributes to the company’s bigger mission. We all want to feel significant.
• Recognize and communicate their impact regularly. Employees should understand how their daily tasks make a difference.
• Align individual goals with company objectives to create a sense of ownership and accountability.

2. Invest in Growth & Development

• Offer training, mentorship, and career advancement opportunities. Employees who see a future at your company are more likely to stay engaged.
• Create personalized development plans to help employees map out their career trajectories.
• Support continuous learning by providing access to courses, workshops, and networking opportunities.

3. Foster a Culture of Recognition & Connection

• Make employees feel valued with frequent feedback, appreciation, and incentives.
• Encourage collaboration and team building to create a sense of community and shared purpose.
• Host regular check-ins to ensure employees feel heard and supported.

4. Provide Autonomy and Flexibility

• Empower employees to make decisions about their work, which increases their sense of ownership.
• Offer flexible work arrangements where possible, as work-life balance can play a significant role in engagement.
• Trust your employees to manage their responsibilities without micromanagement.

At the end of the day, employees want to feel valued, challenged, and part of something bigger. That’s how you create a workplace where people don’t just stay—but actually want to contribute and grow.

Closing Thoughts & Call to Action

To wrap up, reducing turnover should absolutely be a priority—but retention without engagement is like keeping a car that won’t start. You need both elements—keeping your employees and ensuring they’re motivated to perform at their best. Otherwise, you risk paying the price of a disengaged workforce, which can be even more costly than turnover.

So, what are you doing to keep your employees engaged? I’d love to hear your thoughts! Connect with me on LinkedIn or shoot me a message. And if you found this content helpful, please share it with a colleague. It really helps us reach more business leaders like yourself who can benefit. And if you haven’t subscribed to the podcast yet, please do, wherever you enjoy content. The Business Resources One podcast is short, right to the point, and we share a new episode every week to help business leaders.

Until next time, keep building stronger teams and better businesses!