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A Turn For The Better

Employee turnover may be good for your business.
March 1, 1997
URL: http://www.entrepreneur.com/article/13978

Turnover is bad, has long been a cherished management mantra. There's just one problem: It's not true.

"There are definite upsides to people leaving your business," says Julie Davis Salisbury, president of Julie Davis Associates, an Atlanta public relations agency. "I've had some cases where employees quit and it's been the right thing for our business. I've also had to fire a few people, and when I've done it, the business has benefited."

Lately, researchers, too, have begun to see turnover in much the same positive light. "For years, research said turnover was purely a negative, but we've taken a new look, and the fact is, turnover is not always bad," says Ralph Katerberg, an associate professor at the University of Cincinnati College of Business Administration. "Sometimes it really benefits a business."

Salisbury offers an example: "When I started this agency 10 years ago, we had five people on board. One was very talented and creative--but full of doom and gloom. That negative perspective was not what we needed when we were young and hungry. Terminating her was hard for me, but making that decision was very good. It was like a dark cloud lifting from the office."

A resignation, too, can be a boon to the business--as Salisbury knows. "I just had a very ambitious vice president resign. It came to the point where she wasn't happy having no opportunity to be Number One. This became a source of frustration for her, and that started to impact the morale of our employees. When she resigned, I knew it was the right thing--for her and for me."

Sound familiar? In his or her heart, every boss knows that what Salisbury says is on the mark. Who hasn't wanted to party after a troublesome worker announced his resignation? Who hasn't sensed relief wash through the business when a nonperforming or bad-seed employee is let go?

Then, too, the inarguable fact about turnover is that it's unavoidable: "You will have turnover. It's a given," says Roger Herman, a Greensboro, North Carolina, management consultant and author of Keeping Good People (Oakhill Press).

Employee loyalty toward employers has sharply dwindled. "When I've surveyed graduating students, almost none anticipate a long career with any one employer," says Ray Hilgert, a management professor at the Washington University Olin School of Business in St. Louis. "People expect to change jobs often."

At the same time, "jobs are getting more complicated and demanding. Some workers cannot keep up with the new requirements; others don't want to," says Herman. The upshot is that some employees will be terminated, and others will quit. "Turnover is simply part of today's labor market," adds Herman.

That's why it's good news indeed to know turnover can bring big benefits. Such as?






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."

Contact Sources

Roger Herman, (800) 227-3566, (910) 282-9370, roger@herman.net;

Julie Davis Associates, 1 Buckhead Plaza, #520, Atlanta, GA 30305, (404) 231-0660.

Robert McGarvey writes on business psychology and management topics for several national publications. To reach him online with your questions or ideas, e-mail rjmcgarvey@aol.com.