Examining Employee Turnover

by Sharlyn Lauby on June 10, 2010

The new talk on the street is that the number of people quitting their jobs exceeds the number of layoffs.  I wonder if this is the first signs of the double and triple digit turnover that’s been predicted as the economy starts to improve.  Any talk about employees quitting always prompts a conversation about the different kinds of turnover.

Bad turnover is the kind you don’t want to happen (naturally.)  It’s when good people leave the organization.  Usually for your competitors.  People that took you forever to find.  They did a great job.

Good turnover is when people you want to leave – finally do.  Maybe they hung around because they’re set in their ways.  Maybe it’s because you didn’t have the spine to fire them.  Whatever the reason, they’re finally moving on.

But there’s a third kind of turnover that’s sort of a cross between the two.  I call it “set them free” turnover.  It’s when you hire someone who is off the charts fabulous knowing they might only stay around for a short time.

A couple of examples come to mind:

If you’re a start-up organization, you might hire a rock star to get the company going.  Usually that rock star is expensive from a compensation/benefits standpoint.  But you need their experience.  Once the company is up and running, the rock star moves on to their next opportunity.

Another example is an organization in trouble, they need someone with turnaround experience.  The ability to work long hours and make tough decisions.  They are there for the challenge (and possibly the bonus associated with turning the company around) but once that’s done…they’re outta here.

These are both situations where the turnover has mixed reaction.  The people involved are top performers and have done an excellent job for the company.  But you know the company no longer offers what attracted them in the first place.  Don’t be afraid of letting employees leave because you can’t keep them happy.  Just put the reasoning in proper perspective.

While turnover is a metric that all organizations should pay attention to, it’s important to understand what kind of turnover is taking place.  Is your turnover the kind you want – or need – to be successful?

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Brandon Croke June 11, 2010 at 2:45 pm

Great summary on the different types of turnover. I’m always fascinated by peoples decisions to leave/stay at a job.

I’d like to suggest another kind of turnover that I think most companies face. You mentioned when companies bring in rockstars and they start-up or turnaround a company, but what about situations when there are “sleeping-rockstars” that have never been tapped of their true potential?

In general the amount of talent and creativity most companies tap of their employees is usually pretty low. I think the companies that will rule the future will find creative ways to utilize their human capital. I’ll try to explain with an example…

Joe who works in finance draws great comic sketches on the weekends. The company is scrambling to find content for their new industry blog, so they ask him to do a sketch mocking a new product.

The sketch goes viral and increases site traffic to unprecedented levels. When was the last time you aligned an employees passions or natural talent with company objectives?

Sure easier said than done, but I think the future is a multi-talented, mult-disciplinary workplace that values employee originality over factory conformity.

The worst kind of turn over is when this potential talent leaves your company. Bye-bye innovation.

Sharlyn Lauby June 13, 2010 at 2:53 pm

Thanks for the comment Brandon. It’s such a shame when there’s a breakdown in communication and employees don’t realize how valuable they are to the organization.

Chris Young June 13, 2010 at 11:58 pm

Great post Sharlyn – there is certainly more than meets the eye when it comes to evaluating employee turnover!

I have included your post in my weekly Rainmaker Fab Five blog picks of the week (found here: http://www.maximizepossibility.com/employee_retention/2010/06/the-rainmaker-fab-five-blog-picks-of-the-week.html) to help my readers better digest their turnover data.

Be well!

Sharlyn Lauby June 14, 2010 at 8:42 am

Thanks for the shout out Chris! I’m heading over to check out the Fab Five right now.

working girl June 14, 2010 at 2:53 pm

Another example is they’ve maxed their potential in your organization: http://ls-workgirl.blogspot.com/2010/06/is-attrition-key-component-of-retention.html

Sharlyn Lauby June 15, 2010 at 6:49 am

Thanks for sharing!

Steve June 15, 2010 at 10:29 am

What’s sad is when an employer doesn’t realize how important the exiting employee was to the organization until after their gone.

Sharlyn Lauby June 16, 2010 at 10:07 am

So true. I had a director once tell me “we had such plans for you” when I gave my resignation. I’m like, “why did you tell me?!”

HR Pixie February 22, 2012 at 3:30 am

Yes. I agree about the statement that the employees don’t know how important they are to the company.. And also the employers don’t know how to value their employees but only want them to work work work and everything just to boost sales. Having a staffs’ gathering just don’t convince them to stay you know :(

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