I was pondering with one of my colleagues today the question of “how much turnover is good?”, after meeting with an organization that believed the long tenure of their entire staff helped certain processes run smoother. “Some” turnover is good. Companies who brag about 0% attrition are either not aggressive enough in hiring or they are holding on to people they shouldn’t. How to define “some” depends on the industry, function, company size and growth path, among other factors.
The more interesting question is “which kind of turnover is good?” Is it better to do layoffs when necessary or regularly purge the bottom performers? In either case, what’s the right way to identify the people to let go? Usually, the wrong people are let go. Companies down to the wire may send an edict down the chain to cut the same percentage across the board. They cut people in functions not critical at the moment. They cut the most recently hired. Or those who aren’t staffed on billable work at the moment the decision is made. These seemingly “fair” or “just” decision criteria rarely result in the best long-term outcome and usually alienate the remaining employees more. The hallways ripple with conversations related to the insanity of letting the best talent go – it seems everyone is in on the insanity of the decisions except the people making the decisions.
I know companies have been experiencing tough times and must respond to the pressures from their investors or the realities of king cash. It is too bad most companies have not planned an attrition strategy before it is too late to be strategic about it.