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People are leaving jobs more slowly these days.
A record 4.4 million workers voluntarily quit their jobs at the peak of the Great Resignation in September 2021, according to The Bureau of Labor Statistics's Job Openings and Labor Turnover Summary. That number is now down to 3.7 million.
While low attrition is generally good, as it indicates a stable workforce, some turnover is healthy for an organization, says David Lewis, CEO of Operations Inc., an HR consulting firm based in Norwalk, Connecticut. While the exact number ranges widely depending on industry, market, and overall labor trends, he notes that the sweet spot for most companies is around 7 percent.
"Some turnover is healthy because it creates opportunities and provides room for those people at lower levels in an organizational structure to move up," says Lewis. "If no one is leaving, it stifles growth and creativity and can adversely impact your organization's ability to bring in fresh new talent over time."
Of course, one approach to culling a workforce is layoffs, which many large companies, including Morgan Stanley, Pfizer, Google, and Amazon, have all carried out this year. Most recently, music streaming giant Spotify announced it's cutting 17 percent of all employees in a move aimed at "slashing costs," the company noted.
"By most metrics, we were more productive but less efficient," said CEO Daniel Ek in a statement shared with all Spotify employees. "We need to be both...Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact."
There are, however, alternative ways to deal with low turnover that don't involve layoffs. Here are a few.
One way to encourage employees to leave voluntarily is to offer them a generous retirement package--at least one or more year's severance--in exchange for retiring early, notes Lewis. Doing so can free up several positions, specifically at the top of an organization's structure, allowing for new talent to come in and/or current talent to move up. While such a drain of institutional knowledge and experience can be detrimental, bringing in a younger crowd can be essential to securing a business's future.
It's also important to remember that such retirement packages should be offered to everyone, not just employees of a certain age that leaders may want to leave. He notes that targeting individuals based on age can open a company up to potential litigation in the form of discrimination or wrongful termination lawsuits.
Ryan Sprance, co-founder and Chief Branding Office of Bethlehem, Pennsylvania-based marketing company Awestruck (which landed at no. 25 on the 2023 Inc. 5000), says only two of his 53 employees left the company in the last year--and one of them ended up returning. While he loves that employees at Awestruck want to continue working for the company, he says it can be challenging to provide growth opportunities for current employees without open roles.
Lately, he's found luck in letting employees move laterally across the company and change career paths internally. This allows them to bring fresh ideas to other departments and may even open up a new role within the company. "We've been trying to break down individual department silos so people see that there's opportunity to advance across teams," says Sprance.
It's generally a plus for companies to have ambitious, entrepreneurial talent. In times of low turnover, it may be a good idea to take advantage of that, notes Denise Rousseau, professor of organizational behavior at Carnegie Mellon University. She says that doing so could mean sitting down with employees and speaking to them about their future ambitions and whether they should be pursued outside their current work environment. If they do, she recommends offering to fund a portion of their side hustle or business as part of a potential severance agreement.
One company that's taken such an approach is Lattice, a San Francisco-based maker of people management software and a 2023 Inc. 5000 honoree. The company has offered a $100,000 investment to any employee who starts a business within a year of leaving.
"If people have that kind of talent and ambition, why not support them?" Rosseau says. "By doing so you'll free up resources in addition to creating a loyal alum who'll likely speak highly of your organization."
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What to Do When Low Turnover Becomes a Problem
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06.12.2023
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People are leaving jobs more slowly these days.
A record 4.4 million workers voluntarily quit their jobs at the peak of the Great Resignation in September 2021, according to The Bureau of Labor Statistics's Job Openings and Labor Turnover Summary. That number is now down to 3.7 million.
While low attrition is generally good, as it indicates a stable workforce, some turnover is healthy for an organization, says David Lewis, CEO of Operations Inc., an HR consulting firm based in Norwalk, Connecticut. While the exact number ranges widely depending on industry, market, and overall labor trends, he notes that the sweet spot for most companies........
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