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Good Versus Bad Turnover Making the Call

July 30, 2007
Related Topics: Retention, Termination, Workforce Planning, Featured Article, Recruitment
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I know what you are thinking about turnover. As a practical HR pro, you already know that all turnover is not created equal.

    You were reminded of that reality when your own employee relations nightmare (we’ll call him Jim) resigned voluntarily after causing 16 unique complaints from other employees because of his "opinions." (A new record! Unfortunately, none of them were quite enough for you to discipline or terminate him.) Jim was good turnover—really good turnover.

    You also agree with Workforce Management columnist John Sullivan’s point that losing a high performer hurts more than an average performer and should be weighted accordingly.

    So now you’re ready to take action and revamp your turnover reporting system. To get started, you roll through a month’s worth of terminations and classify them as good or bad turnover. You move through a couple easy ones, then you get to the following scenario—a low performer who voluntarily resigned and then filed an EEOC charge in reaction to one of Jim’s "opinions." Is that good or bad turnover?

    And that, my friends, is the rub when it comes to reporting good versus bad turnover. Everyone agrees with the concept, but as the HR pro reporting on it, you have to dig into all the termination scenarios: How many are there—100, maybe 200? What about the combinations determining which turnover bucket they belong to?

    Just as important, you have to ensure that your stakeholders (managers and department heads) agree with how you code them as well. Try rolling out the new good versus bad turnover report without a feedback loop and see what happens. It’s an emotional powder keg, especially for the managers who end up with high bad turnover.

    How do you get your head around all the variables? While each company is different, here’s the initial list of scenarios I classify as "good turnover":

  • Good turnover includes people who have been fully trained but still do not meet expectations from a performance standpoint after a reasonable period of time. You trained them, they’ve had time, and they’re still not where you need them to be. This one is pure judgment. When do you make the cut? Make the move at the right time and it’s good turnover; cut too early and it’s bad turnover.

  • Good turnover includes involuntary terminations. After all, if you made an organizational decision to terminate the individual, you did that with all factors in mind and came to the conclusion your world was better without the individual. Play on and code it as good turnover.

  • Good turnover can include organizational moves that raise your company’s productivity and profitability. No one likes the impact on employees caused by organizational realignments, location closings, etc. You can lose valuable knowledge and skills. But if such moves result in a more profitable and efficient organization, it’s hard to classify the impact as bad turnover.

  • Good turnover includes voluntary terminations involving employees widely reported to be disruptive to your company’s culture. This means your organization’s Jim. Coding individuals like him as good or bad turnover is a judgment call you have to make.

    What about bad turnover? Bad turnover includes losing high performers, but there are other factors as well:

  • Bad turnover includes people you have promoted who decide to leave the company. While a promoted employee could be struggling to meet expectations in their new role, that’s rare. You invested in them, told them you loved them via promotions, and they walked. That can’t be good. Multiple studies confirm that the loss of employees who have been promoted hurts more than average churn.
  • Bad turnover includes new hires who leave your company (whether voluntarily or involuntarily) shortly after joining. Define the time frame based on your culture—60, 90, 180 days, etc. If the new hire leaves within that period, the organization missed on the hire. Multiple reasons could be at play—wrong skills, wrong cultural fit or the wrong motivational fit. The bottom line is that your interviewing process failed to control for the factor in question. As a result, it’s bad turnover.
  • Bad turnover also includes those leaving the company (voluntarily or involuntarily) who end up suing you. If you didn’t manage performance and provide feedback to the extent you needed to and incur a lawsuit or an EEOC charge as a result, your cost of turnover goes way up. It doesn’t matter if the lawsuit has merit; it’s not a good thing.
  • Bad turnover also includes exiting employees deemed as "exceeding" expectations and who have no other baggage that brings the organization down. This was Sullivan’s main target for calculating bad turnover. These are star employees who drove revenue, so you loved them, told them, paid them (hopefully) and they left you anyway. It’s time to look inward.

    That’s my initial list. You’ll undoubtedly come up with more, and you’ll also need to find a way to deal with classifying the various combinations of factors as you develop your enhanced turnover system. It’s a process worth your time, but more detail-oriented than the initial theoretical conversation of classifying good versus bad turnover would suggest.

    What’s next after you complete classifying all the different types of terminations as good or bad? How about coming up with the unique cost of turnover for each of the 100 scenarios? Hire a statistician, because you’ll need the help.

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