Employee Turnover vs. Company’s Performance

In the past, I often came across articles that discussed about teamwork in a company. What is often said is that if a company has low employee turnover, it means that the company has carried out good people management. Is that right?

Business photo created by jcomp — www.freepik.com

In fact, what should be paid particular attention to is the quality of employees who last decades in that company. They are generally people who don’t like changes, not because they love their place of work. Sometimes they secretly nag about the company, about management, about their boss or co-workers, or whatever, and in their opinions, they are the best at their jobs. And if people like this stay with a company in significant numbers, then what appears is low company turnover. Even though it could be that those who leave and look for new jobs are actually the best talents.

How can I know? Because in my previous job, I found that many clients had this type of employee. Even at my previous company, it happened like that too. It turns out that 60% of the existing employees are those who have been involved since the company was founded, and 75% have worked for more than 10 years, even though the company is only 15 years old. They are generally over 40 years old, have families, prefer to sit in the office rather than work out of the office, and always try to procrastinate. This kind of quality is precisely what makes the company difficult to move, difficult to grow even though they feel they are doing good people management, because they can make employees feel at home working. Though it may not be the case, but the old employees secretly realized that they had no value in looking for another job.

This is certainly different from companies that actually implement optimal people management. It can be seen from the company’s performance that is growing well, surviving the crisis, and most of its employees are productive even though they are of mature age. Companies like this have the right strategy for managing human resources. Because without a strategy, it will be difficult to manage employees who are seniors and have handled work in their field for years. As a result, there is no replacement for new employees who are fresher and understand the changing business environment. If you keep your old employees in the same field, you can be sure that the company’s performance will slowly decline along with the age of the company and its employees. What is needed is a career path, a pension package, and a place to accommodate those who are no longer productive. It sounds harsh, but inevitably there must be a way out.

Let’s go back to the companies that have low turnover. I realized this after meeting several former employees of my old company who had skyrocketing careers. This shows that they do have good talent, and of course if they stay in the old company, their careers will be hampered, because the top positions have been occupied by “senior” employees. Whereas in the old company, it will become increasingly difficult to grow, no significant innovation, stuck in competition and unable to change.

Business photo created by tirachardz — www.freepik.com

So don’t be proud if employee turnover is low, but first introspect, what are the contributions of those who have been with the company for a long time, or are they actually an obstacle to growth and innovation.



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