Can Employee Turnover Be Good for Business?

A significant portion of employee turnover may not be preventable. But in some cases, it can offer four clear opportunities to improve business outcomes. In conversation with Mike Boufford of Greenhouse, we discuss:

• The need for balance in employee turnover
• Four ways to convert the turnover into a business benefit
• Why effective offboarding is the way forward
   

Employee turnover is a thorny area for organizations – typically, HR tries to avoid employee turnover wherever possible in a bid to improve retention and cut down on recruitment costs. But could employee turnover prove to be the best way forward in specific business scenarios?

We all know the downsides of employees quitting – but what about turnover that benefits both the employer and employee in the long run? We spoke to Mike Boufford, CTO of GreenhouseOpens a new window , a recruiting software and applicant tracking system, and he had valuable insights to share about the need for balance when it comes to employee turnover.

Learn More:

What Is Employee Retention? Definition, Strategies, and Ideas, With ExamplesOpens a new window

Voluntary vs. Involuntary Turnover: Why You Need a Careful Balance

If you look at the 2019 Retention Report by Work InstituteOpens a new window (email required), it is clear that there is no single cause for employee turnover. While 11% left because of manager behavior, 6% were terminated, and another 6% left to pursue retirement. Employees often decide to stop working for a company due to personal reasons, some of which cannot be preempted. 

• 10% of employees leave an organization due to relocation challenges. While you could offer remote working benefits, it’s likely that relocation for a new home purchase or changes in one’s personal life cannot be circumvented.
• 8% report leaving due to the characteristics of the job. Unless you’re willing to realign the job role itself, employee turnover in such scenarios might not be a bad thing. Looking at the long term, the professionals who choose to leave become better aligned to their new roles while you are free to acquire fresh talent.
• Voluntary turnover increased by 7.6% between 2017 and 2018. This indicates that employees are now open to shorter professional tenures in favor of other factors.
   

Employers must recognize why employees need to move on from a particular company and chase greener (or simply different) pastures.

Boufford elucidates upon this further: “Respect and autonomy are foundational in creating a great workplace culture – that should apply equally as our employees consider the next steps outside of the firm. When we support our people on their way out the door, we may feel some short-term pain as we look to fill the hole they leave behind, but in the long run, it pays huge cultural dividends by signaling genuine care for the whole person.”

So, what could be the positive impact of employee turnover on your business? Here are four standout areas.

Learn More: Culture – An Antidote for the Quitting EpidemicOpens a new window

4 Ways Employee Turnover Could Benefit Your Business

There’s no denying it: not every employee is meant to stay for the long haul. They might have other aspirations, or their work ethic might be out of sync with the broader organizational culture.

“Many managers think they have to focus all of their career conversations around where their people can grow within the company, but if that person’s dream is to start their own business, switch industries, or go back to school, the employee may feel they have to present an inauthentic image of where they want to go,” says Boufford.

In that case, it may help to provide an open culture where employees can talk about their aspirations openly, and for organizations to enable this growth, regardless of whether it is inside or outside the organization. If that is the case, you could expect the following benefits from employee turnover:

1. Eliminates complacency in benefits and compensation
 

Did you know that according to the report mentioned above, 9% of employee turnover can be attributed to compensation and benefits? In a highly competitive labor market, you can’t afford to become complacent about the benefits you offer your employees. Apart from those leaving for personal reasons, compensation and benefits could be a significant trigger.

Employee turnover resulting from this factor should be a wake-up call, alerting employers to adopt more wide-ranging benefits and competitive compensation to help retain their talent. These benefits could include physical wellness, mental wellnessOpens a new window , and financial wellnessOpens a new window , flexible work hours, and remote work options, for example.

2. Strengthens focus on career growth and employee development
 

22% of employee turnover is due to the shortage of career development opportunities. If an employee leaves your organization for this reason, it will alert you to the need to create a proper L&D intervention and career pathing solutions. This effort can help reinforce employee career developmentOpens a new window within the organization.

“People stick around when they feel that they are growing in the right ways – so it’s critical to have authentic career conversations to ensure that we are offering them the support they really need,” says Boufford.

On the flip side, keep in mind that a workforce that’s satisfied with their current level of knowledge are less likely to pursue growth opportunities, and this may take away from your company’s long-term growth path.

3. Boosts the quality of talent
 

Employees who are fundamentally out of sync with the talent levels expected at your company may resign from their current jobs. This may be difficult to map, but over time you should be able to track how such employee turnover positively impacts the diversity of talent in your workplace.

Employees often join an organization with a preset notion of what the job and the associated culture entails. Faced with unprecedented challenges in this regard, they may voluntarily leave the job. This can reveal the real potential of your current talent pool, and as a result, improve company culture, discussed in the next point.

4. Improves the company culture
 

Here, Boufford offers an interesting point of view: “It might sound strange, but I think about this in terms of evolutionary biology: when people leave and they are backfilled with new folks, there is an injection of new thinking and behaviors that the organization can absorb into its culture – just like new genes are spread in the natural world.”

Leverage employee turnover as an opportunity to revisit the tenets of your company culture. With people who were hired via referrals and through limited professional networks leaving your company, you could acquire talent from newer sources that add to your culture rather than merely meeting the “culture fit” criteria.

Learn More: How Can Professional Coaching Stem the Tide of Turnover?Opens a new window

Start Studying the Impact of Employee Turnover with Offboarding Interviews

So, how can you tell if employee turnover is positively impacting your business? The first step is to calculate the cost of rehiring for each employee category and benchmarking turnover against these metrics. Next, conduct detailed interviews with those opting for voluntary attrition to arrive at the root cause(s) of employee turnover.

“Without a new generation of people with a diversity of professional and life experience, it’s difficult for an organization to evolve. The environments in which we run our businesses are ever-changing, so a steady stream of novel thinking can be a massive boon, helping us to adapt to the dynamic world around us,” says Boufford.

Employee turnover can prove to be vital for culture add, apart from streamlining the workforce toward long-term company objectives. By maintaining a careful balance between preventable and non-preventable scenarios, you can ensure that your company is on an organic pathway toward progress.

Have you considered the benefits of employee turnover at your organization? Tell us on FacebookOpens a new window , LinkedInOpens a new window , or TwitterOpens a new window . We’d love to hear about your views in detail!