Turnover has gotten a bad rap. While costly on the surface, a small amount of employee turnover can actually help keep your organization healthy, competitive and profitable.
Debra Jerome, Chief Human Resources Officer at executive search firm Witt/Kieffer, knows this sounds counterintuitive. When she first expressed her thoughts on turnover to her leadership board, there was a collective moment of confusion.
“I’m not saying that long-term employees aren’t still valuable and essential,” she says. “They support organizational culture and history.”
But Jerome also says that without turnover, your organization runs the risk of stagnation. Instead of viewing it as a bad thing, leaders should view it as a necessary part of business sustainability and growth.
According to Jerome, turnover positively impacts the organization in 4 key ways.
Turnover refreshes the organizational skillset.
In order to remain competitive, any organization needs to adapt to the changing needs of the market. Turnover allows for an influx of new talent, which brings fresh ideas, capabilities, and perspectives. Instead of filling skill gaps with expensive consultants or time-consuming training for existing employees, you can recruit individuals with the necessary experience, enhancing the diversity of your organizational skillset to meet market demands now and in the future.
Turnover ensures leadership engagement.
When turnover is low, managers become accustomed to having their critical players in place, creating complacency around concern for future staffing needs. They don’t consider the implications of a sudden loss and, when it inevitably happens, it creates a vacuum that consumes more resources than it should.
Alternatively, when employees leave on a regular basis, it forces leadership to continually think about succession planning. Managers are always asking themselves, “Who can I promote? How can we recruit and attract top candidates?” This creates an engaged, forward-thinking leadership culture.
Also read: 3 Ways to Maximize Employee Engagement
Turnover enhances the training and development of existing employees.
In today’s modern workplace, on-the-job training is a vital part of the new hire on-boarding experience. Typically, existing employees are the ones responsible for carrying it out. According to Jerome, this should be seen as a useful part of the process.
“The best way to learn is to teach others,” she says. “And when existing employees have the opportunity to train new hires, it also helps support a cohesive team.”
Turnover offers internal growth opportunities.
When turnover is too low, it can actually push top performers out. After all, if there aren’t any available positions to grow into, these people will have to look elsewhere for opportunities. Embracing a culture that has the ability and willingness to promote from within helps such individuals remain engaged. Helping people to grow internally has the power to re-energize a team or even the entire organization.
So while low turnover has typically been seen as a marker of organizational health, in the extreme it becomes counter-productive. However, veer too far in the other direction and you also have a problem.
When asked if there’s a way to gauge whether your organization has a healthy or unhealthy level of turnover, Jerome concedes there’s no simple answer.
“Every industry publishes annual average turnover rates,” she says, “But different organizations have different appetites for turnover. It’s important not to get stuck on the exact number.”
Instead, she says to look at the big picture: the market, the overall health of the organization, and how it feels. Are you nimble? Are you able to respond to changing market needs? Are your employees engaged and energized?
“Employee engagement is really at the heart of this,” Jerome says.
From her perspective, a certain amount of turnover has the ability to engage employees from the very top levels of leadership down.