Turnover’s Silver Lining

Employee turnover is higher than ever. In fact, a May 2016 report from Gallup estimates that turnover from millennials alone costs the U.S. economy $30.5 billion each year. Employers are struggling to control these high rates, assuming that something must be wrong with talent management.

But a recent study suggests that high turnover rates aren’t always a sign of bad managers. Researchers found that even workers who had great relationships with their bosses were likely to take new jobs. Why?

Great leaders invest in and develop employees, making them more desirable to other employers.

“What we find is, if you have a good manager, they’re going to invest in you, they’re going to develop you, you’re going to become a better, more competent employee, which also means you’re more in-demand as a worker,” said Ravi S. Gajendran,  professor of business administration at the University of Illinois at Urbana-Champaign and one of the lead researchers.

“And that’s why people leave good managers, precisely because good managers invest in and develop their employees. They typically get a better job with more responsibilities at their next employer.”

Still not convinced turnover can be a good thing? Here are a few reasons why turnover can be good when employees leave for the right reasons:

Better leaders mean better employees who are more marketable: When employees are leaving because they have great leaders who develop their skills, it’s a good sign that the employees are growing in terms of their skills and are more marketable. In fact, high-performance organizations were more than twice as likely to prioritize talent development, according to a recent study of 665 global organizations conducted by the Institute for Corporate Productivity.

In addition, high-performing companies spend 1.5 to 2 times more on leadership than other companies, and reap results that are triple or quadruple the levels of their competitors, a 2015 study conducted by Deloitte found.

When leaders focus on development, employees improve their skills. They’re more productive and complete high-quality work — they’re better employees. So even if some of these employees leave for new opportunities, they’re contributing to the company, helping to meet goals, and moving the mission forward while they’re there.

Former employees become ambassadors: The University of Illinois study found that employees are likely going to leave whether they have a good boss or a bad boss. In other words, turnover is going to happen, and it’s better for employees to leave because they’re empowered by a great leader instead of scorned by a bad one.

Word of mouth is powerful in attracting new talent. In fact, a 2016 survey conducted by Glassdoor found that the majority of job seekers read at least six reviews before forming an opinion of a company.

Article Continues Below

And if you think former and current employees are ready and willing to give positive reviews, think again. Among those surveyed by Glassdoor Data Labs in December 2015, only 49% said they would recommend their employer to a friend.

But when employees leave on good terms, they’re likely to spread the word, recommend the position to others, and talk about the great leadership and development opportunities they experienced while on the job. In other words, they remain ambassadors for the employer brand even after leaving.

The research also found that these ex-employees who have now further developed their skills “are more likely to be open to a reunion with the organization as a so-called ‘boomerang employee,” noted one of the other researchers on the University of Illinois study.

Great leadership breeds great leadership: Turnover is bound to happen, but all of your employees aren’t going to leave in a mass exodus. So while good leadership may cause some of your employees to leave, others will actually stick around for the long-haul. And those employees who do stay may be the most valuable.

These employees have benefited from great leaders and development opportunities. They are the most prepared to take on leadership roles and continue the cycle of leadership within the company. When new leaders come to positions prepared, it saves everyone time. They don’t have to spend a large amount of time getting up to speed — they can hit the ground running.

New leaders will follow the example set by managers before them and continue to nurture the growth of their teams. That way, employees are always learning, potential new leaders are always developing, and yes, talent will always be coming in and out. And with constructive turnover comes an influx of new ideas, energy, and healthy company ecosystem.

Turnover is a hassle, and it’s easy to point fingers and assume something is going wrong when employees leave. But maybe, it’s a sign that things are going right. With great leaders, employees will still leave, but they’ll leave on good terms — and that’s key.

Thuy Sindell is founder and managing partner of Skyline Group International, Inc., and president of the coaching division, an executive coach, and author. The coaching division manages over 170 coaches, facilitators and consultants worldwide. Thuy's executive coaching experience spans over 15 years with companies across a number of different industries and sizes from technology to insurance and from start ups to Fortune 500.

Thuy is also the founder of two software start-ups; Hit the Ground Running (acquired by Kenexa) and Knowledge Genie. She co-authored four books -- Hidden Strengths. The End of Work as You Know It,  Job Spa, and Sink or Swim -- and blogs on Huffington Post and Psychology Today.

Thuy holds a Ph.D. in Organizational Psychology from Alliant International University.

Topics