In the fall of 2003, I accepted a new job as a recruiting manager for a call center business. It was an entirely new business to me and I had a lot to learn in a short amount of time. One thing became immediately apparent: In the call center business, the second most important measure to the business (behind profitability) was employee turnover.
Every conversation I had in my first several weeks on the job (and frankly even in the interview process) revolved around how to decrease employee turnover. This experience created a strong bias in me that almost all turnover was bad turnover. Sure, there's the occasional case where a bad apple has to be fired, but almost every other exit can be traced back to a bad hiring decision or poor management along the way.
While this may have been relevant to the call center, this bias may be getting in an HR leader's way in other places. Is minimizing turnover always the right answer? What if we are working to keep people we shouldn't be?
Consider the following examples.
Scenario 1. Hire for Potential
Consider a consulting firm whose approach to talent is to hire individuals that they believe have the potential to grow into future stars, but lack experience and knowledge when hired. In this hire-and-develop model, it might be imperative to retain talent for five or more years in order to reap the full benefits. Assuming the culture is one that can accommodate people's evolving needs as they age, this organization might reasonably view all turnover as a failure and try to eliminate as much turnover as possible.
Scenario 2: Hire for Ambition
Next, let's imagine a technology organization whose CEO values ambition and grit. This organization's talent model is built around hiring people just before they're ready to make that next step up. Then, once hired, giving them more responsibility and higher goals than they expect to fuel their ambitions. While this model may be perfect for a fast growing tech organization, it can come with a downside. Ambitious people with talent expect opportunities to grow and move up (quickly) as they deliver results. It's impossible (and impractical) to support the number of promotions it would take to keep all of these employees.
In this case, some turnover should be expected, including some high performers. These exits may not be preventable (they will find opportunities if they are good), so instead of trying to stop them, you should support them in a successful transition so they feel good leaving and remain brand ambassadors (and potential boomerang employees).
Scenario 3: Turnover as a Cost of Business
In some high turnover businesses like call centers or restaurants, the talent model just assumes turnover will be at industry average levels (sometimes 150 percent or more annually). They essentially view some roles as having a revolving door where people come and go. This essentially transfers pressure from retention to recruitment. In these cases, the ability to hire quickly and efficiently is vital, because turnover is accepted as part of the business model.
This model typically produces subpar outcomes for everyone from the employee to the manager to the customer. But, when "good enough" will suffice, this may be your reality. The upside for HR is that there's no need to stress about turnover numbers, which is good because you'll likely have plenty of other employee relations challenges to deal with.
Turnover is simply a measurement. How we feel about turnover should be driven by our approach to talent. To change your relationship with employee turnover, you must first get very clear on your organization's talent strategy. Only then can you determine what the right amount of turnover looks like for your organization and how to approach it.
Stay up-to-date on the latest workforce trends and insights for HR leaders: subscribe to our monthly e-newsletter.
Featured on SPARK
SIGN UP FOR THE SPARK NEWSLETTER