A Turn For The Better

Turn About

Don't jump to the conclusion, however, that all turnover is beneficial. A business can have too much turnover--new employees have to be hired, trained and integrated into the organization, and all that costs you money. How to know when turnover is a plus or a minus? "Turnover needs to be managed, and a lot hinges on who is quitting or getting fired and why," says Riggio. As for the "why," a close look can pinpoint problems in the hiring process (are employees hired too casually and quickly?) or in the design of a particular position (does one job consistently suffer high turnover? If so, should it be redesigned, perhaps by parceling out the tasks to multiple workers?).

Just as crucial is who is departing. "When poor performers go, that's obviously for the good, but if you are consistently losing the very people you think are contributing, you've got to look hard at stopping that," says Riggio.

Even when top-notch people leave, though, the fallout will be minimized if you follow Roger Herman's counsel: "Accept that you will have turnover, and prepare for it."

How? "Do succession planning. Always be grooming replacements for every job in the organization," urges Herman. "Know who inside is ready for the next step. Also, particularly for small businesses, a successful strategy is to maintain an active list of potential strong hires outside." If somebody strikes your eye at a trade show or a meeting of the local chamber of commerce, make sure you get contact information and, afterward, stay in touch. Do it informally, with no promises of future possibilities, but "when you're wired into the pool of high performers, you'll be able to quickly fill even [crucial] positions," says Herman.

"Turnover hurts when you don't have candidates in mind to fill the job," adds Herman. "But when people are waiting in the wings, the benefits of turnover are yours to enjoy."

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This article was originally published in the March 1997 print edition of Entrepreneur with the headline: A Turn For The Better.

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