1/5/15

High Turnover Rate - Negative AND Positive






Turnover rate or attrition rate as some companies call it (I have used both terms in the companies I worked for) counts the number of employees leaving the company. If you need detailed definitions and formulas, there are plenty to be found online - more types of turnover, more than one kind of employees taken into account or different timeframes. I won't go here into more detail. I'm just telling you what it means and that's it since most of you have already heard of it.


I have seen turnover as a bad thing for years since I have always taken into account the point of view of HR and that of the employee.

Turnover is a negative thing because:
  • skilled people leave the team which means more work for the rest until they are replaced;
  • people are forced into difficult decisions - leaving their team, the people they know, a job they sometimes like;
  • people are forced into change - sometimes this is good, but the initial impact is tough to handle;
  • it means time wasted by HR to fill the position;
  • it means more time and effort put by all administrative departments to prepare all logistic details for the new employee - badge, computer, other devices needed, special equipment, internet and email accounts, contract, registration with the authorities;
  • time and effort put by all administrative departments to prepare all logistic details for the employee leaving - cancelling badge, computer, other devices needed, special equipment, closing internet and email accounts, contract, telling the authorities;
  • it means more time and effort put into training for the new employee by his/her manager and team;
  • it means money wasted on job ads, recruitment agency work, paperwork, 
Pretty nasty, right?
However, a while ago one of my managers gave me a fresh perspective. I was trying to offer arguments to increase salaries, to offer more benefits since the employees on specific positions left the company and she told me "Let them leave. Attrition is good." My reaction was amazement, anger and astonishment. Was she crazy? How can it be good since we have so much work to do in HR, since we can no longer find skills like rare languages or special IT skills. Then I got it. She was meaning it was good from the company perspective. I was seing things from the perspective of the employee only. But HR is not there to serve employees. It's true that they are HR's clients, but HR's purpose is not to make employees happy. No. It's there to be a moderator between employees and management to try to help both parties.

From the company's perspective a high turnover rate can be a positive thing. Here's why and if I owned the company I would see this perspective first:
  • People with a great seniority in the company earn high salaries after a few years. This means higher costs for the company, even if they are skilled and they offer benefits on the long term. On the short term, this means high costs. Letting them leave and hiring younger, less experienced employees means lower salaries and cost saving on the short term. Some companies with financial difficulties might consider that. They might be interested in cost saving now, not the company perspective in 20 years;
  • New people mean new perspectives on things, on the business, on work inside teams;
  • New employees mean changes implemented easier - they are more flexible and accept a new way of doing things easier since they are not so connected to the old ways anyway;
Would you add anything to my lists?
Take care,
Geo

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