Ultimate Performance: Measuring Human Resources at Work

Obsessing Over Turnover

Late last year we informally surveyed organizations to see how they defined retention. Most considered retention to be the percentage of employees who did not leave within a given time period—which is the inverse of turnover. If that is how an organization defines retention, we can understand the intense focus on cutting turnover. But retention is not the inverse of turnover. Retention is keeping the people you want to keep. Analyzing every turnover statistic and mandating across-the-board turnover reductions could actually trigger the law of unintended consequences. How? Because obsessing over all turnover discourages managers from terminating employees who should be terminated. And in reality, it does nothing to retain employees who should be retained. Retaining the wrong employees discourages the best performers and may even prompt them to look for opportunities elsewhere.