Is staff turnover good?

March 22, 2018

Are there levels of staff turnover that are good? For many years General Electric practised a rigid system of the lowest 10% of performers being managed out or dismissed. For poor performers or lemons (someone who is a negative influence on your business and culture), you want them to go now, as you strive for excellence. Do check, however, if some poor performers were once in the top 10% group. Something changed for them to go from hero to zero.  

 

The generally accepted turnover guide across industries of skilled employees is 15% per annum. If your business is growing rapidly, it could be higher due to the frequent changes in business and employee requirements. What about at the senior C-suite level or in the division you’ve just applied to join. Is the turnover rate above or below the business average?

 

If you’re thinking about joining a company with a higher than average turnover rate, especially in the senior team or the division in which you’ll work, be careful. It’s important to understand why. Did the CEO oversell or misrepresent the business to new recruits? Perhaps their management style is not suitable for most people or their expectations are unreasonable. It may also be that their recruiting process is not robust enough. If you pick this up during your interview process, ensure you unpack it further, obtaining answers to some of the points listed here.

 

To me, high turnover is a bad signal. It shows an inability of the business leadership to sufficiently hire well, to hold onto and develop talent. Good businesses, I believe, are those that are producing profitable results by a team who want to be there, not only for the money. 

 

In Summary: Thinking about your next employer? Find out what their annual employee turnover rate is. It’ll provide you with some meaningful insight.

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