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Employee Turnover: A Positive or Negative Metric?

January 25, 2011

D&B Consulting

Employee turnover is often a metric organizations view as having a negative impact on the organization.
But in a recent  article in HR Magazine, Shari Lau discusses the potential impact of employee turnover in various situations, and how often it can have a positive impact on the organization.

If a poor performing employee quits,  there is no risk of a wrongful discharge claim.  But it can also be an opportunity for positive change for the organization.

In this scenario, the organization can:

1.  Promote a current employee
2.  Hire someone with greater skills
3.  Evaluate the department for possible restructure
4. Realign the budget

If a poor employee is terminated, the impact for the organization can also be positive  for most of the same reasons. In additon, a strong performance management system is evidence to leadership that managers are doing their jobs.  It also helps to increase morale as employees see that their managers are only keeping employees who  have satisfactory job performance.  And new employees can bring a fresh perspective to an organization.

If a high performer resigns, there may be a temporary negative  impact for the organization  if it affects the ability of the organization to function properly.   There are also costs associated with hiring and training a new employee.  But it also provides the organization an opportunity to reevaluate its career and employee development and total compensation programs.

High turnover is a concern, but low turnover can also be a concern if it means that low performers are rewarded with continuing employment.  Low turnover  can  also be a sign of stagnation within an organization, and begs the question, “Why  are these employees not being hired by other organizations?”

Summary

Employee turnover cannot be seen as a negative or positive metric in isolation of other factors. The size of the organization, profit vs. no-profit, and stage of organizational growth are some of the other factors for consideration. But regardless of these variables,  this metric can be used  as a tool to aid the organization’s  strategic planning and budgeting efforts.

From → Human Resources

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