A Turn For The Better Employee turnover may be good for your business.

Turnover is bad, has long been a cherished management mantra.There's just one problem: It's not true.

"There are definite upsides to people leaving yourbusiness," says Julie Davis Salisbury, president of JulieDavis Associates, an Atlanta public relations agency."I've had some cases where employees quit and it'sbeen the right thing for our business. I've also had to fire afew people, and when I've done it, the business hasbenefited."

Lately, researchers, too, have begun to see turnover in much thesame positive light. "For years, research said turnover waspurely a negative, but we've taken a new look, and the fact is,turnover is not always bad," says Ralph Katerberg, anassociate professor at the University of Cincinnati College ofBusiness Administration. "Sometimes it really benefits abusiness."

Salisbury offers an example: "When I started this agency 10years ago, we had five people on board. One was very talented andcreative--but full of doom and gloom. That negative perspective wasnot what we needed when we were young and hungry. Terminating herwas hard for me, but making that decision was very good. It waslike a dark cloud lifting from the office."

A resignation, too, can be a boon to the business--as Salisburyknows. "I just had a very ambitious vice president resign. Itcame to the point where she wasn't happy having no opportunityto be Number One. This became a source of frustration for her, andthat started to impact the morale of our employees. When sheresigned, I knew it was the right thing--for her and forme."

Sound familiar? In his or her heart, every boss knows that whatSalisbury says is on the mark. Who hasn't wanted to party aftera troublesome worker announced his resignation? Who hasn'tsensed relief wash through the business when a nonperforming orbad-seed employee is let go?

Then, too, the inarguable fact about turnover is that it'sunavoidable: "You will have turnover. It's a given,"says Roger Herman, a Greensboro, North Carolina, managementconsultant and author of Keeping Good People (OakhillPress).

Employee loyalty toward employers has sharply dwindled."When I've surveyed graduating students, almost noneanticipate a long career with any one employer," says RayHilgert, a management professor at the Washington University OlinSchool of Business in St. Louis. "People expect to change jobsoften."

At the same time, "jobs are getting more complicated anddemanding. Some workers cannot keep up with the new requirements;others don't want to," says Herman. The upshot is thatsome employees will be terminated, and others will quit."Turnover is simply part of today's labor market,"adds Herman.

That's why it's good news indeed to know turnover canbring big benefits. Such as?

• Boosting morale: Some employees just aren't liked byco-workers. Maybe they are negative; maybe they are mean-spirited.Remove them from the payroll, and morale will go up, as Salisburydiscovered. A big warning, though: Those workers who challenge abusiness's prevailing practices may not be popular--but theycan be essential in keeping the organization competitive. Don'thasten this breed of nonconformist's departure just to get moretranquillity in the company.

• Clearing out deadwood: "Some employees have quit ineverything but name. They still draw a paycheck, but their mindsare elsewhere," says Katerberg. Most businesses have a fewworkers who fit this description. Either you haven't noticedtheir nonperformance (though you can bet their co-workers have), oryou haven't wanted to cut the cord. But these workers need tobe let go, pronto. "Too many employees like this on yourpayroll can bring down a business. It sets a low behavioral normfor other workers, whose productivity starts to sag." Fire thenonperformer (they'll rarely quit). Not only will a productivenewcomer work harder, but the elimination of deadwood also sends amessage to all employees that individual output is crucial.

• Opening rungs on the career ladder: "Turnovercreates opportunities for the remaining employees, particularlywhen senior people leave," says Ron Riggio, a professor at theKravis Leadership Institute at Claremont McKenna College inClaremont, California. A fast way to drive away higher performersis to provide no upward mobility. Even when the newly empty job iscomparatively low on the organizational chart, if the vacancy meanslower-level employees can move up, that's good.

• Stirring the pot: Promote from within--but not always,because bringing in an outsider can shake up a stagnating business."When too many employees have stayed in place too long, youget status-quo thinking. Resistance to innovation develops,"says Hilgert. "Bringing in new people means the culture isconstantly churning, always exposed to new ideas."

• Reshaping the team: The big mistake is to just fill thevacancy. Instead, especially when a higher-level employee departs,use the vacancy to take a fresh look at the organization'sstructure, urges Herman. Will a reorganization better fill thebusiness's needs in the coming years? An opening can be theprod that lets you do a hard rethink of what needs doing, by whom.Says Herman, "You may decide to bring in an entirely differentkind of person from the one who left."

Turn About

Don't jump to the conclusion, however, that all turnover isbeneficial. A business can have too much turnover--new employeeshave to be hired, trained and integrated into the organization, andall that costs you money. How to know when turnover is a plus or aminus? "Turnover needs to be managed, and a lot hinges on whois quitting or getting fired and why," says Riggio. As for the"why," a close look can pinpoint problems in the hiringprocess (are employees hired too casually and quickly?) or in thedesign of a particular position (does one job consistently sufferhigh turnover? If so, should it be redesigned, perhaps by parcelingout the tasks to multiple workers?).

Just as crucial is who is departing. "When poor performersgo, that's obviously for the good, but if you are consistentlylosing the very people you think are contributing, you've gotto look hard at stopping that," says Riggio.

Even when top-notch people leave, though, the fallout will beminimized if you follow Roger Herman's counsel: "Acceptthat you will have turnover, and prepare for it."

How? "Do succession planning. Always be groomingreplacements for every job in the organization," urges Herman."Know who inside is ready for the next step. Also,particularly for small businesses, a successful strategy is tomaintain an active list of potential strong hires outside." Ifsomebody strikes your eye at a trade show or a meeting of the localchamber of commerce, make sure you get contact information and,afterward, stay in touch. Do it informally, with no promises offuture possibilities, but "when you're wired into the poolof high performers, you'll be able to quickly fill even[crucial] positions," says Herman.

"Turnover hurts when you don't have candidates in mindto fill the job," adds Herman. "But when people arewaiting in the wings, the benefits of turnover are yours toenjoy."

Contact Sources

Roger Herman, (800) 227-3566, (910) 282-9370, roger@herman.net;

Julie Davis Associates, 1 Buckhead Plaza, #520, Atlanta,GA 30305, (404) 231-0660.

Robert McGarvey writes on business psychology and managementtopics for several national publications. To reach him online withyour questions or ideas, e-mail rjmcgarvey@aol.com.