Managing Employee Turnover

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Hello friends.

Now, let’s talk about “Functional turnover”.

What happens in functional turnover is whoever your poor performing employees are, whose performance is not up to the mark, we ask them to leave.

Well, first of all, they are put in the “performance improvement plan” which we also call PIP. If he is unable to improve his performance even after PIP, then it is clear that the employee simply cannot meet the goals and expectations of that position.

Rather than terminating the employee, we come up with some performance plans so that the employee can elevate his performance. But, if that fails, and the employee feels additional pressure to perform, in such a scenario, the employee automatically departs.

If we notice over a period of time that the employee fails to meet up with the firm’s expectations despite putting the person on PIP, then we may have to terminate the employee.

Then another example would be when an employee is on a final written warning for attendance which means the employee is not regular to work and the employee tells the employer that due to family issues, the employee can no longer provide his services to the organization.

And he might add an additional clause, that he has got additional responsibilities, so he cannot work in the specified working hours. Therefore, the employee either leaves on his own or based on the warning that has been issued, if he is a repeated defaulter, then the organization has the full right to terminate him. Okay.

So, overall, it’s all about the performance. It’s all about how well the person is able to handle certain things. But, if that fails to happen, then the case might turn into a termination or a voluntary resignation.

In either case, the person needs to be separated from the organization. (I hope this much is clear)

Now, moving on, let’s talk about “dysfunctional turnover”.

Look, in functional turnover, we learned that it is beneficial for the organization if someone is leaving the firm. But what happens if the key employees that we want to retain, leave? That’s what we call “dysfunctional turnover”.

So, it is mainly the departure of effective performers of the firm that the company would like to retain.

For example, a high performer leaves the current organization and joins the competitor’s firm to make more money, a better title, and a deserving role. So due to the above reasons, the employee leaves the current organization.

Let’s take another example. Now, suppose a reliable employee quits because the organization is too rigid and does not want to give flexible work hours, also the company could not accommodate the needs of the employee, in such cases too, the employee prefers to leave the organization.

So, you also have to keep in mind that as an organization, how flexible are you in terms of growth, in terms of providing employee benefits, and how well do you understand the employee needs and fulfill it. That is also very important.

If functional turnover is beneficial, then dysfunctional turnover can be very dangerous for any organization because your key talents are leaving the firm. Okay.

Hence, this is a warning sign for your organization that you have to change the way you work. You cannot continue working the way you do because not only the business is affected due to this, but the teams are also affected. You cannot keep adding new members again and again because training them and making them familiar with the team culture and expecting deliverables from them becomes quite a challenging task in itself.

Eventually, you will notice that instead of growing the organization is declining more if you don’t take the necessary action in time. This is an extreme scenario.

Then the next type of turnover is “avoidable turnover”.

This turnover can be prevented. This type of turnover can be prevented by employers. As I said earlier in dysfunctional turnover that the basic thing any employee expects is fair pay, title, and flexibility.

Now, suppose your pay level is low compared to others in the industry, employee dissatisfaction is huge, or the work-life balance is poor, then in all the mentioned scenarios, turnover is expected.

You can totally avoid this by making some basic changes in policies, in the way you work, and in the way you provide a good working environment to your employees. (Clear?)

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Now, let’s talk about “unavoidable turnover”.

“It is the turnover that cannot be prevented by the employer”.

For instance, when an employee becomes a parent, they either leave the job or relocate. In such situations, you can do nothing to stop them. Or when an employee “experiences serious illness”, you cannot hold them back. In one more situation where his or her spouse relocates due to another job, you cannot prevent that turnover too.

So, you have to create a balance between the things that are in your control and the things that are no longer in your control. (Got it?)

Now, let’s talk about one of the most important topics which is “managing the talent during mergers and acquisitions”.

You might have noticed that whenever you talk about mergers, joint ventures, and acquisitions, the employees start to panic. They panic and get worried about their job and the organization.

They worry about the experience of working with the new organization. They get questions like; will they understand your capabilities? Will our pay structure get cut or remain as it is? You get a lot of questions when these kinds of business decisions are taken.

Now, in this whole turmoil situation, retaining key talent becomes very essential. Because if the key talent leaves the organization, then after the merger and acquisition, the new organization might not work that well.

Now, there is already a transition phase, right? Just imagine, if your key talents leave then it becomes quite a challenge to get new people into the firm.

In such scenarios, it is essential to retain your key talent.

More importantly, as an organization and a people leader, you should communicate with people, and give satisfying answers to their apprehensions and questions so that their uncertainty declines.

When you have clear communication, people will trust you more. Okay. But, when you start hiding things from people or fail to keep them aware of the situation and they come to know some things from the outside, eventually they won’t trust you. (Right?).

Well, not only your key talents, but other employees might also end up leaving your organization.

So, here you have to pay attention to how you manage the transition? How do you manage the communication and how will you retain your key talent within the organization?

Now, there is a very interesting strategy for this that is termed “golden handcuffs”. What is it? Well, you “create financial agreements with key talents to retain them”.

What are those financial options?

One is “stock options that will mature over a period of time”. You can give your company’s stocks to the employees to benefit over a period of time.

There is a lock-in period, maybe 3 or 4 years after which they start gaining the benefits. Until then, they will also get an idea of your working pattern, they will know if working for this organization is beneficial or not, and if they find it advantageous, then they may work for you for a longer period of time. Okay.

Here, the retention bonus also works really well. Because when you give such bonuses to your employees that you can get an X amount of bonus for serving so and so time, some employees might stay back to gain that bonus.

Therefore, when a key talent stays in your organization, then the chances of the merger and acquisition or the joint venture being highly successful are more.

We all know that an organization is built entirely on its employees. I keep saying this because it is very important, though we tend to forget this….

Look, suppose if there is a merger or downsizing, then increase their severance package to retain them for a certain period of time. You can ask them if they stay for a certain period, they will get X amount extra than the others.

The people might definitely stay back for that severance package.

When we talk about mergers, acquisitions, and joint ventures, this is quite a dynamic scenario. We have to handle it in a way so that a smooth transition is obtained for the new organization and our employees trust us and stay with us for a longer period.

Well, in this entire module, we specifically talked about turnovers as it is quite important and many people usually hesitate to talk about them. But we should know the importance of turnover in any organization. How beneficial is it? How non-beneficial is it? And how can we manage them? (Got it?)

So, I will meet you in the next segment with some new knowledge. Until then, take good care of yourself.

Thank you.

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