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Is All Turnover the Same?

July 24, 2014

Turnover. The dreaded “T” word that plagues HR departments around the globe. Not only do HR managers struggle with it on a daily basis, but also it’s a hot research topic among I/O psychologists. The primary reason for the heavy focus on turnover is due to the devastating costs associated with it. Specifically, it is estimated that the total cost of turnover ranges between 90% and 200% of the leaver’s salary.

Is All Turnover the Same?

The simple answer – NO. When well-qualified and high performing employees leave an organization it is termed dysfunctional turnover because it results in negative (i.e., dysfunctional) consequences for the organization. This is the type of turnover that organizations attempt to prevent. Conversely, sometimes when employees leave the organization, there are positive outcomes. This is termed functional turnover. You may ask, what could possibly be beneficial about losing employees? Well, the answer lies in the type of employee that is lost. As discussed, losing a high performer is bad for business; however, losing a poor performer can actually result in improved organizational performance. Poor performers can come in many packages but the impact on the organization is often the same. Some examples of employees whose absence might be welcomed are:

  • People who slack off and don’t do their own work

  • People who consistently make errors or mistakes

  • People who create drama by gossiping or creating tension between workers and/or management

  • Individuals with negative and cynical attitudes

  • Employees who have poor interpersonal skills and cannot work effectively with others in a team environment

  • Employees who are engaging in illegal or unethical behavior (e.g., theft, harassment)

You may be asking how these types of employees have not been caught and fired. There are a number of tactics that these individuals may employ to keep suspicions about their performance at bay. These include:

  • Masking their incompetence by blaming others for mistakes

  • Withholding information

  • Schmoozing upper management

  • Doing the bare minimum just to get by

It is also important to keep in mind that the process of documenting poor performance and engaging in coaching and development activities can lengthen the stay of a poor performer. As such, firing is not taken lightly in most organizations and going through the proper protocol can be lengthy. Additionally, other employees may be reluctant to rat this person out to upper management in fear of being reprimanded themselves. As a result, these employees tend to skate by until they self-select themselves out of the organization or make a glaring mistake that can no longer be covered up. Consequently, the full negative impact that they have had on the organization is often not recognized until they depart.

Negative Outcomes of Keeping Poor Performers

Having poor performers in an organization can be detrimental in a number of ways. Perhaps the most influential of which is the impact that the problem employee has on other high performing and well-qualified employees within the organization. Including, but not limited to:

  1. Increased Stress Among Good Employees. Employees may feel pressure to make up for work that the problem employee fails to finish, resulting in an increased workload and increased stress on the well-qualified employees.

  2. Lower Performance Among Existing Employees. Furthermore, this increased workload and stress could escalate to resentment toward the problem employee and even the organization itself. Which, in turn, could result in negative work attitudes, counterproductive work behaviors, or decreased performance of high quality employees.

  3. Low Morale. If there are a number of individuals in a specific team or workgroup, the entire group morale may be low simply from being forced to work with or work under a problem employee.

  4. Distrust of Leadership. If strong performers feel they are working with poor performing individuals and that no one is willing to take action to improve the situation, they are likely to lose faith in their leaders and perhaps the organization itself.

Positive Outcomes of Functional Turnover

When poor performers leave an organization, the remaining employees feel a sense of relief; perhaps those who remain even celebrate the departure of the problem employee. Regardless, when such an employee makes the decision to turnover, it results in positive outcomes for the organization ranging from increased productivity and morale, to organizational citizenship behaviors and beyond. The moral of the story is that not all turnover is bad, and in some cases turnover can be extremely beneficial if the “correct” employees choose to leave.

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Alli Besl, Ph.D. Alli Besl, Ph.D. was a Research Consultant based in the Pittsburgh office of PSI. Her areas of expertise include: employee turnover, selection and recruitment.