Reducing Turnover? Yes, It’s Important, But It’s Not the Real Goal

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“Our goal is to reduce turnover by 25 percent.”

No, it isn’t. I hope not, at least.

Having reduced turnover as a goal leads to all kinds of strange, short-term thinking that lead to deranged organizations. A counter-offer when your 325th best salesperson decides to take another job? Lengthening the corrective action review process? Pushing beyond the budget on labor costs because your team is too expensive? Ploys and programs designed to cater to middle and low performers who may be a flight risk?

Yep, yep, yep and yep.

Measuring what is meaningful

You may even have an executive who is looking at some dashboard in a system and she is instructing you that you have to get control of turnover. She may want to build some goals around reducing that number. Nod your head and then walk out of her office and ignore that.

Reducing turnover may be an OK outcome but it is never a goal. And even if it is an outcome, it is a lousy, broad measuring stick. A 2 percent turnover rate sounds great until you realize that your organization is bleeding only high performers and high potentials.

So can we agree that reducing turnover is a stupid measuring stick and that it shouldn’t be used as a goal or outcome?

Maybe? I’ll take it. If you are using it for an outcome, make sure what you’re measuring is meaningful.

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What’s the real issue? Some possibilities

If someone in your organization is complaining about high turnover and reducing it isn’t a goal or outcome, what’s the proper response? The proper response is finding out what the real issue actually is:

  • Our labor costs are too high. How are we investing labor dollars? Why can’t we do a better job of doing that?
  • Our recruiters are spending too much time on replacements. Is there a resource allocation issue or are we short on recruiters?
  • We’re losing people after 6/12/18 months. What are we doing in our hiring process that sucks so bad?
  • A top performer left. Yeah, his boss was an asshole. Maybe we should get rid of him?
  • Our culture needs to be changed. Guess what? Culture change will cause massive turnover too.
  • We aren’t performing well as a company. And you found a metric that may or may not have to do with that? Really?
  • The company isn’t well managed. Trying to blame general management issues on turnover is like blaming In-N-Out for your gut.

Turnover? Important, but not the real goal

Turnover is a symptom like body aches. Body aches can be really bad when you’re sick because it can indicate the flu but body aches can be fine if you’re getting back in shape.

Should you keep track of turnover? Sure, and if you can, get as granular as you can (who is leaving and why?). Does reducing turnover take precedent over increasing profit, value, and company performance or reducing costs, administrative burden and culture issues?

No, never. And don’t forget that.

The was originally published at Lance Haun’s (Life Between the Brackets) blog.


3 Comments on “Reducing Turnover? Yes, It’s Important, But It’s Not the Real Goal

  1. Good point.
    Also, from my point of view, to have a common goal with all managers to reduce turnover by creating long term vision and different tools for achievement is important too.

  2. Actually turnover is good when it’s the poor performers. So turnover really just needs to be managed.

  3. Of course a high turnover rate – say 55% just after bonus time – is excessive and should be reduced. It won’t be though. Certain employee demographic studies show some “types” more likely to walk than others at that time. Just ask Model Risk managers at a certain major bank. On the other hand, in others, at a certain major life insurer, a certain group of AVP level executives should be encouraged to walk. You would need a crowbard to move their idle flatulent selves however. When idle losers like those mentioned leave it isn’t turnover. It should be called “firings”. When droves of young actuaries or risk quants leave, now that’s “turnover”.

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