The Leadership Challenge: Turnover – 4 Tips!

The Point: As leaders, we know that turnover is “bad” for business. We’ve all seen the stories and statistics regarding how employee turnover costs a business roughly two-times (2x) the staffer’s compensation according to industry expert estimates. But we started thinking here at Tip of the Spear, is there a time when the costs associated with employee turnover are worth it? In other words, would you gladly pay 2x a staffer’s salary to see them simply go away! So in this post, we’ll explore the leadership challenge of turnover, along with 4 tips… Enjoy!

The Leadership Challenge Turnover 4 Tips

Be Successful Somewhere Else!

In recessionary times when unemployment rates are high, business leaders cut staffing so as to reduce expenses. Seeing how expenses (costs) associated with labor tend to be some of the most high, and easily lowered through staff reductions, this appears to be an easy fix.

However, the model shifts when times are good and unemployment rates are low. That model then becoming one where the rising tide of revenue conceals the costs associated with labor. In other words, we see less-turnover as a result. But should this be the employee turnover case?

Hire Slow, Fire Fast!

At a recent roundtable discussion, we brought up the topic of employee turnover and the impact “bad” apples (employees) can have on the business. Seated around the table were leaders from a variety of industries, all with the common goal of becoming better (Better businesses, better leaders, better etc.) It turns out that while most leaders looked negatively on turnover for two traditional reasons:

  1. The aforementioned high costs associated with turnover, and
  2. The reasons why employees leave the company.

But just why do we as leaders care why employees leave our company, and are there times when their leaving can be advantageous to our business model? At a firm that I recently consulted with, they had a standard hiring procedure that could be summarized as “Hire slow and fire fast.” In other words, the length of time/people/consensus decision-making involved would be significantly longer than previously conducted. Gone were the days that if a leader needed a new associate they could simply run an ad (or ask a present employee if they knew someone) and hire them once they passed a few high-level cursory questions. If their organizational goal was to attain the best possible employee for the near/short-term, then lengthy job descriptions needed to be written, recruiting strategies (where to place ads, how to screen applications, etc.) put in play, interviews with multiple organizational participants leveraging the same questions, and consensus regarding “best” candidates conducted post-interviews.

Of course, if the hiring process took a long time, then the firing determination needed to be executed with haste/speed! As one leader explained to me, “We need to come to a determination regarding new employees that are underperforming. While we’d love to believe that we’ve given them the proper tools to be able to conduct their new role (Training, technology, etc.), if they are simply unwilling to conduct their jobs according to our expectations then we need to quickly assess this unwillingness and allow them the opportunity to be successful somewhere else.”

4 Tips for The Leadership Challenge: Turnover

What follows then are our summation regarding why turnover might be good (dare we say “Great” for an organization and its leadership):

Tip #4 – Productivity

If you monitor productivity in your business (and who doesn’t?), then one surefire way to identify if employee turnover is warranted is to identify if productivity rates are consistently below target levels. Target levels established at realistic levels typically will define if performance levels are not being attained by staffers now, in the future, or ever.

Tip #3 – Teamwork

Teamwork makes the dream work… or so the saying goes! But what happens when the team has to pick-up the slack of the lagging associate? Is it fair for a team to consistently pick-up said slack continuously? We don’t think so… Teams are only as good as their weakest link, and if the weakest link is the same individual time and again, then turnover is warranted.

Tip #2 – Brain-suck

Subject Matter Experts (SMEs) are the staying force of an organization. They typically are a wonderful resource for new and old employees alike. However, what happens when these SMEs are spending more of their time working with employees that just don’t seem to “get” their job duties? Is this the most valuable time for such SMEs to be spending their time? We don’t think so…

Tip #1 – Training Expenses

For those that know me, you know that I’m a huge proponent of training. Whether it’s in-house or external, whether provided by in-house SMEs (See “Brain-suck” above in Tip #2 for The Leadership Challenge: Turnover) or strategic partners (Do you still call them “Vendors” in your organization? Welcome to 2018!), soft or hard-skill based I believe that training can make the difference for success in individuals as well as organizations at large. However, if training expenses are not showing significant return on investment (ROI), why are you doing them? Isolate monies spent and results returned on training expenses and you’ll gain insight into if turnover should take place (HINT: The answer isn’t necessarily more training, regardless of what your Chief Learning Officer tells you!)

SUMMARY

In this post we’ve explored The Leadership Challenge of Turnover, as well as provided 4 tips for when employee turnover should be encouraged by leaders. Remember, we all should have the expectation to earn a living conducting work. However, some work should be done by individuals willing/able to perform such work.

Sam Palazzolo

PS – If you like this article, you’ll love my new book titled “Leading at the Tip of the Spear: The Leader.” This first in a series of five books takes a look at what it takes to lead from a private equity | Venture Capitalist’s perspective. 100% of the net profits go towards our 501(c)(3) nonprofit at the Javelin Institute. You can purchase a copy from Amazon by CLICKING HERE.

About Sam Palazzolo, Managing Director

Sam Palazzolo is Managing Director at Tip of the Spear Ventures, an agile Venture Capital and Business Advisory Services firm specializing in Mergers & Acquisition, Sales / Business Development & Turnaround Management.