The Different Types of Turnover HR Must Know

Turnover is a scary word for HR. It is an issue that HR managers struggle with every day. The main reason for the heavy focus on turnover is because of the devastating costs associated with it. It is estimated that the total cost of turnover is between 90% to 200% of the leaver’s wage.

Not all turnovers are the same

Below, there are two types of turnover: Dysfunctional and Functional turnover.

Functional Turnover

Functional turnover happens when people leaving the firm are underperformers. This is normal in large consulting, accounting and law companies that uses "up or out" philosophy. Employees in these companies must grow and improve to move up in the ranks.

Those who are unable to progress are let go. Usually, these companies have high turnover, but the employees who stay are the best and brightest.

Here are some examples of poor performers:

• Employees who slack off and don’t do their work

• Employees who create drama by gossiping or creating tension between coworkers and/or the management

• Cynical and negative employees

• Employees who consistently make errors or mistakes

• Employees who engage in illegal or unethical behaviour

You may be asking how these kinds of employees have not been caught and fired. There are a number of strategies that these employees use to keep suspicions about their performance low. These include

• Doing the bare minimum work just to get by

• Withholding information

• Sweet talking the upper management

• Hiding their incompetence by blaming others for mistakes

Dysfunctional Turnover

When high performing employees leave a company, it is called dysfunctional turnover because it leads to negative consequences for the company. This is the kind of turnover that organisations try to stop.

Dysfunctional turnover happens for many reasons, but the main reason is the top performers do not have the opportunity to advance their career in your company and decided they will find better opportunities elsewhere. 

How to Control Turnovers

It is also important to remember that the process of documenting poor performance and engaging in coaching and development activities can make a poor performer stay longer. Firing is not taken lightly in most companies and it can be lengthy to go through the proper protocol.

There are functional turnovers and dysfunctional turnovers.

Other employees may be reluctant to report this person to upper management in fear of being reprimanded themselves. Which is why these employees managed to stay hidden until they quit or make a glaring mistake that can no longer be covered up. As a result, the full negative impact that they have had on the company is usually not recognised until they have left.

Human resources managers should encourage functional turnover while attempting to avoid dysfunctional turnover. They should:

• Execute an evaluation system that can distinguish underperformers and top performers.

• Underperformers should be encouraged to improve and if they cannot, they should be fired.

• The top performers should be provided with challenging, new openings and promotions so your company can keep them.

Negative Results of Keeping Poor Performers

• Increased stress among good employees

Employees may be under pressure to make up for work that the poor performer fails to finish, increasing their workload and stress.

• Low morale

If there are a number of people in a specific team, the entire team’s morale may be low simply from being forced to work with or under the poor performer.

• Lower performance among existing employees

The increased workload and stress could escalate to resentment toward the poor performer or the organisation. This will result in negative work attitudes, counterproductive work behaviours or decreased performance of high-quality employees.

• Distrust of leadership

If good performers feel they are working with poor performers and that no one is willing to improve the situation, they are prone to lose faith in their leaders and maybe the organisation itself.

Positive Results of Functional Turnover

• When poor performers leave a company, the remaining employees will be able to continue their work with high productivity and uninterrupted..

• The company could experience increased productivity and morale.

Not all turnover is bad, sometimes it can be very beneficial if the “correct” employees choose to leave.

Is your company hiring? Replace the poor performers with talented candidates from AJobThing.com

This article is adapted from Is All Turnover The Same by Allison Besl