Is High Turnover “Really Bad” for Your Business?

It used to be that high turnover was a really bad sign for your business. It meant that people didn't have an interest in remaining with your company, that you needed to hire better people, that you had issues to manage up or manage out or several other KPIs that could make your company look bad. But in today's modern society, high turnover isn't necessarily a bad sign — in fact, some companies, such as Zappos, are paying new hires to quit! Turnover can actually provide benefits to your company. Here's a quick look at how you can take advantage of a high turnover to grow your personnel, teams, and company.

Is High Turnover “Really Bad” for Your Business

Many people you may hire in your business are simply going through the motions of doing enough to avoid getting fired. Unfortunately, an employee that is so unengaged in your company may be able to stay hired, but they're not necessarily building a strong team that will drive your company forward. By removing these individuals from your company, you can instead focus on building the kind of team you need to enjoy solid growth. An approach such as that taken by Zappos gives these individuals a solid motivation to leave the company rather than drag it down with them for just one more paycheck.

“Everyone that’s hired, it doesn’t matter what position–you can be an accountant, lawyer, software developer–goes through the exact same training as our call center reps. It’s a four-week training program and then they’re actually on the phone for two weeks taking calls from customers. At the end of that first week of training, we make an offer to the entire class that we’ll pay you for the time you’ve already spent training plus a bonus of $2,000 to quit and leave the company right now. Really, the goal of that originally was to weed out the people that are just there for a paycheck,” CEO Tony Hsieh mentioned in an interview.

Part of this approach is brought on by the Millennial generation. Focused on personal growth and satisfaction with what one is doing with one's life, this generation is far less likely to stick around at a job that they dislike and are more likely to jump ship for a company that makes them feel fulfilled. The companies that they do stick with tend to be more successful because the employees are fully engaged at a company that they feel gives them more out of life.

For this reason, high turnover isn't the same mark of failure in human resources and training as it may have been perceived to be in the past. Instead, it's a sign that a company is willing to spend a lot of time and resources to get the right people on board. 

A framework that leads to success for both the employee and the company

When looking at turnover, you first need to reflect on and ask yourself, is this part of the plan? Meaning do you have a plan that sets the expectations of both the employee and the company. 

When we work with organizations on Sales Ops, we help them create a financial plan and a model that shows the employees our expectations along with how they can/will impact the companies financial performance. 

So when we talk about turnover it’s important to ask, is this part of the plan. 

It can be seen as a sign that a company is dedicated to spending more to retain the right people down the road, when they may have other offers coming their way. In either case, it shows a deeper connection between the company and its team, providing reassurance in an uncertain world that the company will do well when its people do well.

High turnover isn't a bad sign for your business anymore, but it can be concerning if you don't have a plan behind your high turnover rate. If you need help with a performance review system that delivers strong results, provides amazing engagement, and builds strong-performing teams that help your business thrive, TeamRocket can help. Our simple three-step process makes it easy to stay on top of performance reviews, SMART KPI’s and team building. Please feel free to reach out today to learn more about how we can help improve your company's team engagement, reviews, and management to maximize growth and a stable team long into the future.