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Employee Engagement

How Turnover Can Be Positive for Your Company

June 26, 2018
7 min read
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Performance Management, Supercharged


There is serious pressure for organization leaders to engage employees and hit peak productivity. In 2017, 56% of CEOs reported “recruiting and retention” as primary concerns. A company cannot function without its employees; individuals that have valuable skills and training that can take weeks, months or years to match. So, of course, HR is in overdrive, managing engagement, strategizing long-term retention plans and calculating turnover rates. While those elements of talent management should never be overlooked, leaders may take comfort in the fact that there are some positives to seeing employees go. What benefits could employee turnover possibly have?

56% of CEOs reported “recruiting and retention” as primary concerns. But could #EmployeeTurnover have benefits? @ClearCompany has some insight:

Improves Talent Potential

Employee turnover can sometimes be an indicator of moving towards success at an organization. When an organization fosters continual growth, there’s a give and take. Some employees will meet the challenge that comes with high growth and continue to fit the culture while others hit setbacks, feel a disconnect from the strategy or want to grow in a different direction. In all those situations, it is better to exit the employee than force an employee to fit to a culture and vision they normally wouldn’t.

No matter how talented, an employee who doesn’t believe in the business strategy, culture or mission will not be as successful as a more aligned employee will be. And without turnover, you are not making room to hire, retain and engage more A Players.

A more extreme example of this is seen in Jack Welch’s stacked ranking. Welch, the then CEO of General Electric, would annually evaluate employees on a bell curve where the top performers, or A Players, made up 20% of the company, average workers held 70% and the bottom 10% were considered underperformers. Those in the 10% were fired under the belief they were harming the potential of the company through preventing room for high performing employees to join the team. While this may be an extreme case, if your low performers are churning out at a higher rate than your top performers, you are actually creating room for a higher percentage of top talent.

Incentivizes Productivity and Avoids Complacent Work

CC-positives-seeing-employees-go-Social-ImageWhen an employee leaves, there is a role to be filled. In some cases, your organization will be able to quickly recruit, train and hire. Those more advanced positions can be tough to fill and have a more negative impact. Yet, sometimes in those moments of shuffle, previously unrecognized A Players emerge. First and foremost, the opening could be an opportunity for remaining employees who are compelled to prove their proficiency within the role.

On a similar note, the productivity of employees is tested. Regular or high employee turnover forces leadership to take a critical look at the remaining team. As A Players emerge, so do under-performers. Though a stacked ranking system might not work for your organization, this time of reflection can help managers see and address performance issues in ways that drive productivity without losing skilled workers.

Turnover Can Create Talent Success

As we’ve been discussing, not all turnover is bad. However, if your organization’s turnover is comprised of any significant percentage of your top performers, you are going to want to take immediate action to retain the right employees.

On the other hand, if you are consistently seeing B or C players leave on their own accord, it may be a sign that your performance-driven culture or compensation plan is accomplishing its intended mission: retaining and engaging the best of the best. Parting ways with a low performer or even a middle-of-the-road employee can be for the best, but only if you are replacing them with A Players. Those new hires should challenge the status quo, bring ideas from previous organizations or simply have a fresh take on program or strategy that hasn’t been refreshed in too long. No matter what drives the change, the organization is able to capitalize and, in turn, better compete within their industry and market.

This might be hard to believe, but employee turnover can be a good thing for your organization:

Cracks are Exposed

When a high performing employee leaves, a sort of “systems test” is seen. How well integrated are the company’s systems and workflows? The problems within these systems or workflows will quickly show themselves. Since the person who had the most knowledge has left, you can take the opportunity to see where the “cracks” are. Focus on the problems and tighten up the process so the next time someone leaves no “cracks” happen.

Having the person with all the job knowledge in their head write a manual can set the next person in that position up for success. This allows the opportunity for your company to recognize the contributions this employee gave while they were there.

As a leader, your job is to develop people to be marvelous in their careers and industries. The work they did while in your company matters and it’s fine to acknowledge that even though they are leaving. Chances are you may encounter them in the professional space again so leaving a positive impact on their career could work in your favor.

Turn Employee Turnover Into Opportunity

Competition not only exists with customers, but employees as well. Knowing where the departing employee is going and why can help determine where you could be falling short, particularly if you have multiple people leaving for the same organization. Learning from your competition and making the necessary adjustments can help slow your turnover rate.

A company should take an honest look at the people departing and ask if that employee was the right fit. They may have had all the right qualifications, but didn’t fit in with the company’s culture. Sometimes letting them go is what’s best for both parties. Use this experience to improve your hiring and onboarding processes. Look for applicants that fit into your culture as well as having all the right qualifications.

Once you gain more A Players who mesh well with the culture you have worked hard to create, evaluate your appraisals and compensation strategy. To have and keep the best, you have to give the best. Make sure you’re attracting the best talent in the industry and not losing it due to pay.

Millennial Changes

Millennials are known for job hopping often. However, more recent data suggests they aren’t job hopping much more than Generation X did back in 2000. Only 36.6% of Millennials stay in a job for 13 months or less. Despite the actual statistics, the presumption that Millennials are job hoppers is enough to create these five changes in the workplace:

  1. Previous generations followed the pattern of training for a particular company and sticking with them for the remainder of their career. Millennials don’t follow this rule and they are not expected to. Accordingly, companies are preparing for the cost of turnover and are less surprised and more prepared, when their employees start to leave.
  2. Salary isn’t the only way to retain employees. Millennials are looking for more than just a large sum of money. They are looking for an employer who shares their values, because they’re seeking a sense of purpose and growth in their careers.
  3. Workforce experience is more diverse, today. Due to a higher turnover rate, Millennials’ resumes are filled with diverse job experiences. Bouncing between multiple employers may seem like a bad thing, but it gives new perspectives and new experiences that you can use to find success in almost any other position. Enriched employees are more skilled and more likely to come up with creative solutions to problems.
  4. With all the job hopping, Millennials require less on-the-job training. This generation could be considered more educated than previous generations. Their numerous jobs have given them more exposure to common skills, procedures and even software platforms in the industry. Employers can use this to their advantage by spending less on training for each new Millennial hire.
  5. The gig economy is thriving and Millennials are boosting it. According to Larry Alton, Millennials are “born with a desire to get more work done for less money, and take advantage of the connective opportunities provided by the internet, the ‘gig economy’ refers to an increased demand and availability for independent contractors and non-committed workers.” This arrangement works perfectly for this generation’s workers. They are looking for experience and money, but don’t want a long-term commitment.

Millennials are changing the stigma around job turnover. Employers can use these changes by offsetting some of the turnover cost by spending less on training for new Millennial hires.

The ultimate goal is still to hire, retain, and engage, but by changing the thought processes on employee turnover, employers can use the benefits to create a better environment for everyone. Learning from these employee experiences can transform turnover into a positive for your company.

When you hire, retain and engage the right people in the right role for the business need at hand, and deploy them against your goals at a higher rate than the competition, you have achieved Talent Success. Clearly hiring top talent is a goal that takes a combination of tactics and strategy to achieve, however turnover can play a helpful role in increasing the amount of true A Players you employ.  

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