Having an alarming rate of traffic move through the office has a negative impact on all areas. Losing good people and then training replacements means productivity slows down. Without continuity, operational flow is interrupted.
Morale certainly suffers as seasoned staffers wonder who will be next to go and leave them to pick up the extra work or carry out unfinished projects, or else they avoid making meaningful connections with newcomers lest they too disappear by the end of the quarter. And once word gets out that the company has a retention issue, potential employees stay far away, deciding that the work environment must be toxic.