High turnover is bad (and costly) for business, but a professor of management says not enough people leaving also has its downsides
Companies known for great workplace culture, innovation and industry leadership can become what's known as ‘destination employers' - a place workers aspire to work and often don't want to leave.
On paper, this sounds like the gold standard in staff engagement - high retention, low turnover and reduced recruitment costs. But can there be a downside to low staff attrition?
HRD spoke with Professor Daniel Samson, the chair of management in the School of Management at the University of Melbourne, who said it can have an impact on growth because you don't have the skills you need for the future.
“The skills of the existing workforce may no longer be a good enough fit for requirements going forward, but because nobody's leaving - you've got no room for development. Being an employer of choice means you have good development strategies - so using them to upskill your workforce could be the answer."
The comments come following professional services firm, PwC, announcing earlier this month 1,500 of their staff in the US were being let go, with low attrition being cited as a factor.
Reported by the Financial Times, it is understood around 2% of the company’s 75,000 workers in the US were let go, mainly in its audit and tax businesses.
“This was a difficult decision, and we made it with care, thoughtfulness and a deep awareness of its impact on our people, appreciating that historically low levels of attrition over consecutive years have made it necessary to take this step,” PwC said, according to the report.
Samson noted that people generally don't leave a destination employer, saying “workers that stay in organisations like PwC either stay for six months or stay for life. What needs to happen, therefore, is a steady amount of turnover by constantly assessing the skills match and skills mix in an organisation."
This Samson told HRD, ensures constant room for development.
One of the key ways to reduce risk of low attrition is through constantly assessing the current workforce.
“If someone, for example, isn’t on board with digital transformations, let’s find out on a continuing basis. That gives you the opportunity to upgrade their skills to match the company’s advancing technology – but also gives you the chance to reroute their skills to another part of the business," Samson noted.
“It’s better to do this on a continuing basis than to reach somewhat of a crisis point where you must let go a significant chunk of workers. By doing this, not only are you going to get bad press, but you’re also creating a bigger skills shortage because those roles have to be filled."
Taking many “small steps,” Samson outined, is key to address the constant change in the demand for skills - being proactive is better than being reactive.
Samson also noted using “natural attrition” to manage recruitment on a continuing basis – which could include encouraging early retirement.
“It’s not necessarily always about getting rid of people in a way that can cause friction – there are things at your disposal to make this easier. Early retirement schemes, job sharing, deploying people in different jobs.”
“This is a good way of ensuring a constant development of skills across the business – those that can’t take on new skills or change, someone else can. There could be another place in the business they can go,” Samson explained, “Taking stock of what you have and putting that against what you need is much better than taking these large, harsh steps, of a mass-exodus of people.”
The issues faced by PwC are not unique, with firms such as Deloitte also dealing with similar problems. Earlier this year the UK-based firm announced plans to lay off employees in its US consulting division – with a decrease in employee departures cited as a key factor.
“We shouldn’t be shocked that this happens,” Samson emphasised, “When you’re known for fantastic career development and employee perks, you can’t be shocked that people don’t want to leave. You just need to manage how you utilise your workforce to find opportunities to ensure the skills you need are available to you.”
