Not All Employee Turnover Is Bad

The latest report on Job Openings and Turnover Statistics from the Bureau of Labor Statistics is set to release October 11, 2017 and provides an updated annual assessment of the state of the corporate workforce. And yet, this report falls short of capturing the full story of employee turnover in the United States.

Historically, employee turnover is tracked as the total number of people that worked for you for the year divided by the average number of workers. Employee turnover is also defined purely from the perspective of the business’ bottom line and ignores the myriad of reasons people leave to begin with – it fails to capture the why.

Every company expects to retain and lose workers regularly as part of doing business. According to the Bureau of Labor Statistics, the average salaried worker keeps his job for a little more than four years, and the average service worker for a little more than three years. Some will leave to retire, some to pursue a new opportunity elsewhere, and some may be laid off or fired.

The employee turnover within the workforce is defined as attrition and is considered natural in any business and industry. It’s also historically tracked as a negative business indicator because of the high cost of recruiting and retraining new employees. In some industries, the turnover rate can top out at over 100% (i.e. hospitality, retail, healthcare and food service).

Some organizations also look to employee turnover as a tool to reset their workforce. According to Al Bondigas, “sometimes changes within an industry demand that fresh workers be brought in, and if a company’s culture heads downhill, it’s wise to clear out workers who push it in the wrong direction.” This type of turnover is sometimes defined as “positive attrition” – attrition that is ultimately good for the bottom line of the business (as opposed to the negative attrition that is the loss of a productive employee).

My colleague TJ Abood, an Investment Partner at Access Ventures, feels this definition is inadequate and he is attempting to reframe the meaning of positive attrition. For one, the other definition frames the reset from the perspective of the company and it’s bottom-line. It is an attempt to defend any employee turnover as a gain or loss for the business.

Positive attrition demonstrates intentional professional development and is in the best interest of the employee

Within TJ’s framework, negative attrition is employee turnover that is the result of under-performance or a bad fit between employee and employer, and neutral attrition is turnover as a result of retirement and other normal life events (relocation, etc). Positive attrition can consequently describe (and celebrate) attrition that is the result of an employee graduating to a new job which they would not have been able to get without the training/development of their current employer.There is an old business joke where the CFO asks, “What happens if we invest in developing our people and they leave us?” and the CEO responds, “What happens if we don’t, and they stay?”

Positive attrition demonstrates intentional professional development and is in the best interest of the employee – which is how we normally describe their growth anyways. It should be an active goal of every employer today to discuss every aspect of our associate’s lifecycle with the company from that vantage point. Attrition defined from the perspective of the employer is defensive (at best) and counter to how we talk about our employees as team members.

Positive attrition, therefore, should be celebrated and reported. Yet in order to break down employee turnover, we have to be intentional about tracking turnover. We need to better understand why someone leaves a company and celebrate the story of opportunity and growth when we see it in our employees. It’s a net positive for the individual, the community, and the company if someone is able to leave for a better job that sets them on the path towards a career. Therefore not all employee turnover is bad, and it’s time we started thinking about it from the perspective of the American worker.