Turnover-Induced Organizational Atrophy
or Death

by Roger Herman, Tom Olivo, and Joyce Gioia

When competent workers leave, it is with a sense of confidence that they can find a new, better job fairly quickly. Most have their next job arranged before they leave, thanks to a steady stream of recruiters knocking on their doors. Have you ever asked your top performers how many calls they get from recruiters? You might not want to; the answer may give you nightmares.

Positions vacated by the competent workers now have to be filled. Who will move into those chairs? You may promote from within; you may hire from outside. What are the chances of your replacing the departed employee with a worker with comparable competence? Let's extend "competence" to include experience, intellectual knowledge, and relationships with coworkers and customers. Let's face it: Whomever you place in the vacated position may not be as strong as the valued employee who left.

As highly competent employees leave, you are often forced to replace them with people of less competence. As the labor market tightens, finding and hiring high-level replacements will become increasingly difficult, if not impossible. Result: Your aggregate workforce gradually becomes less competent. Translate that fact into productivity, profitability, and corporate sustainability.

Over a period of time, an organization may atrophy to the extent that its functionality becomes severely diminished. Mistakes are made often. Customers are not served as they should be. Research and development becomes stale. Sales volume drops, taking cash flow along with it. Morale slides downhill. Before long, the company goes out of business. How fast this process occurs varies from one organization to another. Usually smaller companies go under first, since they don't have the capital or momentum to support them. Larger organizations continue to exist for a longer period, though many people - inside and outside - know the company is doomed . . . often before senior leaders get the message.

Death by turnover comes slower, often preceded by a coma. If you reflect for a moment, you will be able to come up with a list of several organizations you deal with right now that seem to be in a coma. When voicemails are not returned, sales calls aren't made, deliveries are late, manufacturing is plagued by rework, and employees exhibit a lackadaisical attitude, you have a coma condition.

Corporate Homicide . . . or Suicide

If uncontrolled turnover is killing your company, is this homicide or suicide? Well, maybe it depends on how much you are controlling the situation.

If the economy is hot and there are plenty of jobs available, the employment market will pull people from your organization. Even if the market is not hot, there may still be a strong demand for certain types of employees who work for you. If you are not doing enough of the right things to hold your good people, you may be an accessory to the talent theft.

When the economy is not hot and there is minimal churning in the employment market, some employers tend to treat their employees with less care. Do so, and you may abet warm-chair attrition - workers leave psychologically, but continue showing up for work physically. This condition can be considerably more expensive than if workers leave physically - empty-chair attrition.

If you treat people badly and ignore the need to consciously retain your valued people, you may be guilty of staffing suicide. You are causing your own problems, regardless of the external environment.

Is corporate resuscitation possible? In many cases it is . . . if the leader is dedicated, focused, and vigorous. This is a leadership issue, not a human resources issue.

Excerpted from Impending Crisis: Too Many Jobs, Too Few People by Roger Herman, Tom Olivo, and Joyce Gioia (Oakhill Press, 2003).

Roger E. Herman and Joyce L. Gioia-Herman are Strategic Business Futurists concentrating on workforce and workplace issues. They are authors of a number of books in the field and are sought-after speakers on trends and employee retention. Information about them and their work is available at www.herman.net. Contact the authors through roger@herman.net .

Many more articles in Motivation and Retention in The CEO Refresher Archives


Copyright 2004 by Roger E. Herman and Joyce L. Gioia-Herman. All rights reserved.

Current Issue - Archives - CEO Links - News - Conferences - Recommended Reading