The Truth About Managing People, Third Edition

Truth 57. Employee Turnover Can Be a Good Thing

The traditional view of voluntary turnover is that it has a negative impact on organizational performance. When an employee quits and has to be replaced, an organization incurs both obvious and hidden costs. They include the costs of recruiting, selecting, and training new hires; as well as the additional inefficiencies from workflow disruptions as new employees learn their job, make mistakes, and “get up to speed” in understanding the organization’s culture.

While this traditional view is intuitively appealing, it’s a gross generalization. The evidence suggests that low levels of turnover can be functional, especially in certain organizations or departments within organizations.

Why can turnover ...