Dysfunctional turnover is the loss of poor-performing employees who choose to leave an organization.

Turnover is a scary word for HR. It is an issue that HR managers struggle with every day. The main reason for the heavy focus on turnover is because of the devastating costs associated with it. It is estimated that the total cost of turnover is between 90% to 200% of the leaver’s wage.

Not all turnovers are the same

Below, there are two types of turnover: Dysfunctional and Functional turnover.

Functional Turnover

Functional turnover happens when people leaving the firm are underperformers. This is normal in large consulting, accounting and law companies that uses "up or out" philosophy. Employees in these companies must grow and improve to move up in the ranks.

Those who are unable to progress are let go. Usually, these companies have high turnover, but the employees who stay are the best and brightest.

Here are some examples of poor performers:

• Employees who slack off and don’t do their work

• Employees who create drama by gossiping or creating tension between coworkers and/or the management

• Cynical and negative employees

• Employees who consistently make errors or mistakes

• Employees who engage in illegal or unethical behaviour

You may be asking how these kinds of employees have not been caught and fired. There are a number of strategies that these employees use to keep suspicions about their performance low. These include

• Doing the bare minimum work just to get by

• Withholding information

• Sweet talking the upper management

• Hiding their incompetence by blaming others for mistakes

Dysfunctional Turnover

When high performing employees leave a company, it is called dysfunctional turnover because it leads to negative consequences for the company. This is the kind of turnover that organisations try to stop.

Dysfunctional turnover happens for many reasons, but the main reason is the top performers do not have the opportunity to advance their career in your company and decided they will find better opportunities elsewhere. 

How to Control Turnovers

It is also important to remember that the process of documenting poor performance and engaging in coaching and development activities can make a poor performer stay longer. Firing is not taken lightly in most companies and it can be lengthy to go through the proper protocol.

Other employees may be reluctant to report this person to upper management in fear of being reprimanded themselves. Which is why these employees managed to stay hidden until they quit or make a glaring mistake that can no longer be covered up. As a result, the full negative impact that they have had on the company is usually not recognised until they have left.

Human resources managers should encourage functional turnover while attempting to avoid dysfunctional turnover. They should:

• Execute an evaluation system that can distinguish underperformers and top performers.

• Underperformers should be encouraged to improve and if they cannot, they should be fired.

• The top performers should be provided with challenging, new openings and promotions so your company can keep them.

Negative Results of Keeping Poor Performers

Employees may be under pressure to make up for work that the poor performer fails to finish, increasing their workload and stress.

If there are a number of people in a specific team, the entire team’s morale may be low simply from being forced to work with or under the poor performer.

The increased workload and stress could escalate to resentment toward the poor performer or the organisation. This will result in negative work attitudes, counterproductive work behaviours or decreased performance of high-quality employees.

If good performers feel they are working with poor performers and that no one is willing to improve the situation, they are prone to lose faith in their leaders and maybe the organisation itself.

Positive Results of Functional Turnover

• When poor performers leave a company, the remaining employees will be able to continue their work with high productivity and uninterrupted..

• The company could experience increased productivity and morale.

Not all turnover is bad, sometimes it can be very beneficial if the “correct” employees choose to leave.

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This article is adapted from Is All Turnover The Same by Allison Besl

Often, as an HR employee, you tend to see turnover as a bad thing. Some say that high employee turnover indicates a chaotic workplace. That’s not true. Employee turnover is often weighed up against the type of turnover it is. Four types of employee turnover exist. In this blog post we explain you the four types and go over some useful practices to reduce negative employee turnover.

Employee turnover definition

Employee turnover or simply turnover in an HR context is when an outgoing employee replaces a new employee. Higher turnover means many outgoings and arrivals. Lower turnover refers more stability in terms of people working at the company.

Departures though are common, especially in the modern workplace. These departures can concern any reason from the ending of an employee’s contract, to an unexpected death. The response of your HR team needs to be rapid. Using an HR Software is the ultimate solution to control the turnover rate and keep a balance with recruitment activities.  Having a strong HR team with the adequate tools will help your company to keep turnover controlled at all times. Let’s dig into the types of turnover now.

What are the four types of employee turnover?

Because your talent has various ways of escaping your grip and you want to retain as many high performing employees as possible, you often may think of turnover as a concept that an only be negative. This is not necessarily the case as sometimes you may have high turnover but can keep your best performers and consistently perform well.

There are four types of turnover, that cover two dimensions:

• Voluntary turnover. Occurs when an employee voluntarily chooses to leave the organization. The reasons for this departure may vary. Anything from a better job offer to a breakdown.
• Involuntary turnover. This occurs when it is the employer that gets rid of the employee, usually for poor performance or force majeure.
• Functional turnover. Refers to turnover when the employees in question are low performing individuals in the company and can be let go with ease.
• Dysfunctional turnover. Refers to turnover of employees who had big leadership potential but left the organization. These are the worst cases of turnover, and the ones you want to avoid by creating a succession plan.

Solutions to employee turnover

If employee turnover is too high, you can find yourself having to spend too much time training new talents coming in to the organization. Investing in effective onboarding processes is recommended so that you can quickly recruit to replace any departing employees. Sesame HR is a human resources software that can help with that issue. Its onboarding software fits any company and allows HR teams to create checklists of tasks to introduce new employees in a simple and effective way.

If employee turnover is too low, you may be hanging on to poor performing employees, who would be served better if they moved out.

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