At first glance, the phrase "employee turnover" has a negative connotation – a stigma associated with an employer's obligation to reduce turnover at all costs. However, there are different types of turnover and not all types of employee turnover are negative. Turnover occurs for a variety of reasons, ranging from termination for poor performance to the departure of highly-skilled employees who resign after they help grow start-up businesses to sustainable levels.
Understanding Involuntary Turnover Rate
Involuntary turnover occurs when employers terminate an employee or ask an employee to resign. The latter may ultimately be considered voluntary turnover; however, the initial decision is to effect an involuntary turnover. When employees are terminated for violating workplace policies, poor performance or business slowdown, the departure is considered involuntarily. Some instances of involuntary turnover may cause trepidation among remaining employees.
Employees who witness regular involuntary turnover or terminations might be concerned about their own job security. Other employee terminations may come as a relief to remaining employees, whose morale and productivity suffer when poor performers affect the workplace climate.
Voluntary Turnover Examples
Voluntary turnover occurs when employees leave of their own volition. Employees who resign, retire or simply leave the organization for other reasons are all voluntary turnover examples.
Attrition is often part of the turnover analysis. Human resources experts define attrition as a decrease in the workforce for voluntary departures. The difference between attrition and voluntary turnover is that employers do not replace employees who leave by virtue of attrition. While some instances of voluntary turnover may occur because employees are dissatisfied, a number of employees resign for reasons unrelated to working conditions.
Examples of voluntary turnover for non-work-related reasons are:
- Employees who leave their jobs to travel with spouses
- Students who leave the workplace to return to school
- Employees who choose to leave the workplace to become stay-at-home parents
Positive Types of Employee Turnover
Desirable – or positive – turnover occurs when the workforce experiences change due to new employees bringing fresh ideas and perspectives to the company replace workers who are terminated for poor performance. Infusing new talent in an organization can re-energize the workplace, catapult productivity and boost profitability. Employers may initially be apprehensive about this type of turnover, simply because the word turnover has a negative connotation. Replacing a stagnant workforce can be costly; however, employers ultimately realize the the return on investment in recruitment and selection processes for new and fully engaged employees.
Negative Types of Employee Turnover
Negative turnover is often referred to as undesirable turnover. It's easy to understand why turnover is considered negative or undesirable when employees leave under a cloud of circumstances such as suggested wrongful termination, mass exodus of disgruntled workers or workplace conflict.
Mass layoffs, business closure and plant shutdowns might also be classified as negative or undesirable turnover – layoffs have a devastating impact on workers and the surrounding community. The negative effects of losing jobs in certain areas can create a downward spiraling effect to economic conditions for employees of other nearby companies. For example, when employees suffer job loss from a plant shutdown, surrounding companies that provide services such as meals and other lunchtime and break-time services also suffer from lost revenue.