Losing the Losers – Is Employee Turnover Always a Bad Thing?

Typically, the term ‘employee turnover’ has negative connotations, usually related to cost: the cost to re-hire and the cost to re-train.

However, is an organisation with low or no turnover really a good thing? Perhaps it is due to one of the following reasons:

• Lack of employment opportunities within an organisation.
• Financial constraints preventing employees from moving.
• Bad company image that keeps recruiters away.
• A high concentration of older workers reluctant to change jobs later in their career.

Dr John Sullivan, the internationally known HR thought-leader, writing on ere.net, classifies employee departures into desirable, neutral and undesirable outcomes. Below are some of his key points for consideration:

Desirable Turnover
Studies show that at least 25% of turnover is desirable. Situations where this may occur include:
• A low-level performer leaves on their own accord (therefore avoiding the need to terminate them).
• An average or lower level performer gets replaced by someone that becomes a superior performer (referred to as a talent swap).
• An employee with key skills working in a non-critical job/business unit transfers to a strategic job/business unit.
• A lower-level employee is replaced by promoting someone inside that needed more challenge or growth to develop (thus improving the organisation, increasing internal movement).
• The exiting employee is a retiree who led a fulfilling career and has agreed to consider ‘fill-in’ work during retirement.

Neutral or OK Turnover
Such situations include:
• Turnover of an employee or contractor who was hired to provide short-term coverage.
• Turnover by an employee who provided sufficient notice, enabling an exceptional replacement to be sourced, hired and trained prior to the employees exit.
• Turnover by an employee leaving a more generic role with a short learning curve.
• Turnover of a top performing employee who has a high probability of returning in the future.
• Turnover of an employee who left as a result of major illness or something that could not be predicted or prevented.

Critical or Highly Undesirable Turnover
This is the key area upon which focus retention efforts on. Situations falling under this category include:
• Turnover of a top performer with little or no advance notice.
• Turnover of a critical team leader or manager.
• Turnover of an employee that possesses the only knowledge or experience in a critical field in the organisation.
• Turnover of an employee in a revenue generating or revenue impact job.
• Turnover of a top performer or a key individual that goes to a direct competitor.
• Turnover of a high-potential individual who left due to a lack of development opportunities.
• Turnover of an employee who subsequently files a credible government or legal complaint against the organisation.

Labelling turnover ‘good’ or ‘bad’ depends primarily on the business impact caused by the departure of the employee. If employee turnover means losing an individual who is a ‘bad actor’, the impact can be beneficial to your company. For the remaining staff members, the departure of an employee with a negative attitude can seem like a breath of fresh air. For the business owner, it means no longer having to deal with the problems that employee caused. Employee turnover can also have a positive impact if it means replacing a long-term employee who is simply going through the motions or biding their time until retirement.

By regarding turnover as an opportunity, employers can rest easy knowing that new staff will ultimately bring new life to their businesses, nurturing its growth and development.