The Pros and Cons of Employee Turnover in Enterprises
Employee turnover represents the number of employees who leave an enterprise and are replaced
by newer employees. Some amount of employee turnover is inevitable and a natural process for
any enterprise. However, a high employee turnover ratio may indicate some deep-rooted malaise
within the enterprise. Conversely, a low turnover could also spell danger in the enterprise
becoming lethargic, and fall into a rut.
Enterprises have traditionally regarded employee turnover as a big problem. The loss of an
employee means loss of experience and the loss of years of accumulated expertise. An old
employee takes away the familiarity accumulated over the years. A replacement, a new recruit
would have to go through a considerable learning curve before he or she can take the place of a
departing employee. A Deloitte study estimates a new employee taking as much as two years to
match the productivity levels of an employee who was very competent and familiar with their job.
The company would also have to spend considerably on recruiting costs for the new employee and
then to train them in company systems and procedures. The problem is accentuated by the severe
talent crunch plaguing most sectors.
An SHRM (Society for Human Resource Management) study reveals employers spending anywhere
between six to nine months of an employee’s salary to identify a replacement, and train them. The
figure becomes huge and very detrimental to the enterprise finances when there is a high
employee turnover. There is also indirect cost, with a leaving employee generally drowning the
morale or employees who chose to remain.
However, in the light of the changing nature of the business, many enterprises have started to
discover employee turnover may not actually be as bad as it was supposed to be. Today’s world is
extremely fluid, with new technologies rendering incumbent technologies obsolete by the day.
New technologies render incumbent technologies out-dated, and new paradigms, based on new
technologies and new ways of work, take the place of old paradigm frequently. Change is inevitable
and only those enterprises who are willing to cope with change, and have the required adaptability
and agility to master the changed circumstances quickly and seize the opportunity, can expect to
survive. In such a state of affairs, unlearning is just as important as learning. Change management
is an extremely tough task, with practical roadblocks, resistance to change, uncertainty, and mental
blocks hindering employees from adapting to change.
In such a state of affairs, new employees are a godsend opportunity for enterprises to start on a
clean slate, to embrace new concepts or new technologies without being encumbered to the past.
New employees also bring in fresh energy. Incumbent employees may have reached a point where
they feel tired by the routine of their existing jobs. New recruits bring in fresh ideas, fresh ways of
work, and enable an enterprise to do things differently.
It is also easier to motivate newer employees. Incumbent employees invariably get a sense of
“been-there-done-it.” Newer employees could still be motivated by targets and promising rewards
at the end of the rainbow. The need to prove ones within a new enterprise would motivate newer
employees to put in an extra mile. In a fiercely competitive world, this could make all the
difference between victory and a good fight.
Employee turnover represents the number of employees who leave an enterprise and are replaced
by newer employees. Some amount of employee turnover is inevitable and a natural process for
any enterprise. However, a high employee turnover ratio may indicate some deep-rooted malaise
within the enterprise. Conversely, a low turnover could also spell danger in the enterprise
becoming lethargic, and fall into a rut.
Enterprises have traditionally regarded employee turnover as a big problem. The loss of an
employee means loss of experience and the loss of years of accumulated expertise. An old
employee takes away the familiarity accumulated over the years. A replacement, a new recruit
would have to go through a considerable learning curve before he or she can take the place of a
departing employee. A Deloitte study estimates a new employee taking as much as two years to
match the productivity levels of an employee who was very competent and familiar with their job.
The company would also have to spend considerably on recruiting costs for the new employee and
then to train them in company systems and procedures. The problem is accentuated by the severe
talent crunch plaguing most sectors.
An SHRM (Society for Human Resource Management) study reveals employers spending anywhere
between six to nine months of an employee’s salary to identify a replacement, and train them. The
figure becomes huge and very detrimental to the enterprise finances when there is a high
employee turnover. There is also indirect cost, with a leaving employee generally drowning the
morale or employees who chose to remain.
However, in the light of the changing nature of the business, many enterprises have started to
discover employee turnover may not actually be as bad as it was supposed to be. Today’s world is
extremely fluid, with new technologies rendering incumbent technologies obsolete by the day.
New technologies render incumbent technologies out-dated, and new paradigms, based on new
technologies and new ways of work, take the place of old paradigm frequently. Change is inevitable
and only those enterprises who are willing to cope with change, and have the required adaptability
and agility to master the changed circumstances quickly and seize the opportunity, can expect to
survive. In such a state of affairs, unlearning is just as important as learning. Change management
is an extremely tough task, with practical roadblocks, resistance to change, uncertainty, and mental
blocks hindering employees from adapting to change.
In such a state of affairs, new employees are a godsend opportunity for enterprises to start on a
clean slate, to embrace new concepts or new technologies without being encumbered to the past.
New employees also bring in fresh energy. Incumbent employees may have reached a point where
they feel tired by the routine of their existing jobs. New recruits bring in fresh ideas, fresh ways of
work, and enable an enterprise to do things differently.
It is also easier to motivate newer employees. Incumbent employees invariably get a sense of
“been-there-done-it.” Newer employees could still be motivated by targets and promising rewards
at the end of the rainbow. The need to prove ones within a new enterprise would motivate newer
employees to put in an extra mile. In a fiercely competitive world, this could make all the
difference between victory and a good fight.
