If you’re an employer, you’re familiar with the rising costs of recruitment. The expenses involved with making a new hire can mean you’re focusing more attention than ever on retention, to reduce employee churn and lower hiring costs.
While retention is an important part of building a stable, high-quality workforce, there are actually several reasons why employee churn might actually be a good thing for your organization. They all have to do with Quality of Hire.
Understanding Employee Churn
Employee churn is usually defined as the percentage of employees that leave an organization within a specified time period. If a company has 100 employees, and ten leave over the course of a year, that company has a 10% churn rate per annum.
A turnover of 10% a year actually isn’t that bad of a churn rate for many industries. However, it’s not really the number of employees churning, but the quality of employees churning that you really need to be paying attention to.
Losing a low-performing employee does require their replacement, but getting rid of poor workers can produce a net benefit in the long run. The key is knowing how to identify which workers are engaged and motivated, and which are just showing up for the paycheck.
What’s Quality of Hire Got to Do With Employee Churn?
Quality of Hire is typically associated with employee turnover in a preventive sense: hire the right employee for the right job, follow up by tracking employee and team satisfaction, and you won’t have to worry so much about churn. Employees will stay because they are a perfect fit.
However, not all employee churn is regrettable. Quality of Hire can be poor, leading to a negative impact on your organization and a corresponding effect on business outcomes. When you have a low-performing employee, you want them to churn. Retaining poor workers leads to more losses than the cost of firing and rehiring ever could.
Low Quality of Hire means an employee could cost you money and lower overall company morale, and losing them would not be a tragedy. Becoming better at identifying quality talent can reduce the number of low-potential candidates you end up hiring, and increase the number of workers you want to retain and/or promote.
Clarifying what makes an employee valuable to the company or not is at the heart of Quality of Hire, and can help you determine which employees are critical to seamless business operations, which ones you can afford to lose, and who you should show to the door yourself.
5 Reasons Employee Churn Can Be Good For Business
Here’s why one survey says keeping low-performing employees is worse than letting them go.
1. Low-performing workers are “toxic”
Low performers can seriously damage company culture and team cohesiveness in the workplace. According to the survey, 68% of respondents said their top concern about low-performers was that they reduce overall workplace morale.
2. Low-performers increase workloads
In response to another prompt, 44% of respondents said that their low-performers increased the work burden on high-performers. Having your top talent constantly picking up the slack without recognition or compensation quickly leads to resentment and loss of those higher quality workers.
3. Low-performers stifle innovation
Respondents also pointed at low-performers as contributors to a standard of mediocrity. In fact, 54% said that these workers were fostering a lack of initiative and motivation in their organizations, creating a work culture that accepted mediocrity.
4. Low-performers cripple production
Another problem with low-performing employees is that the worst of them produce a third or less than their peers. Multiply that amount by the number of low-performers in your organization, and you’ll see how much poor workers could be costing your company annually (and how much you owe your top talent for trying to maintain quotas.)
5. Low-performers encourage presenteeism
It’s a fact that non-health-related presenteeism (employees who show up but don’t do much more than clock in and clock out) costs businesses 10x as much as absenteeism every year. Low-performing employees make this standard the new normal, encouraging others to do the same and causing mounting frustration among the shrinking pool of employees actively shouldering the load.
Looking at these numbers, it’s pretty obvious that fighting to prevent these types of employees from churning is actually counter to the goal of building a strong, productive, and future-proof workforce.
How Crosschq Can Help Identify Employees Who Need to Churn
Figuring out who your best employees are is important because you want to know who to nurture, who to give a raise or promotion to, and who to go to when you need help. However, you also want to know who your worst employees are, so you can either help them improve, or let them go and fill their spot with someone who will meet and exceed your requirements.
Crosschq Analytics is the Talent Intelligence tool designed for measuring Quality of Hire - without falling prey to unconscious bias that can plague performance reviews and employee evaluations. You can leverage the data you have on employees as well as surveys that gather information on manager and employee satisfaction.
Utilizing a Quality of Hire scorecard can help you distill this data into an easily digested percentage Quality Score, which can then be tracked over time to see which employees are improving and which are staying stagnant or regressing.
While it’s never pleasant to let an employee go, getting rid of employees who don’t positively impact business outcomes and who show themselves unable to improve is a critical part of workforce optimization.
Ready to learn more about how Crosschq can aid you in your quest to build a better workforce? Contact us for a demonstration today.
From pre-hire to post-hire, Crosschq helps you source, screen, onboard, and measure the best talent. Fast.
Request a free demo from a team expert to see how we can help your company.