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Dysfunctional Turnover: What it is, and How to Avoid it

March 2, 2022

upset team members at work

Keeping your business directed toward a successful trajectory requires consistency in certain areas. One of the most important is maintaining a talented and committed workforce. Without some element of stability in your employee base, this is likely to quickly translate to the instability of your business. As such, turnover is one of the key concerns for business owners.  

There’s certainly no escaping turnover to some extent. This is part of the natural ebb and flow of any business. But you need to make sure it represents a healthy balance. Enough turnover to ensure you gain fresh new talent, but enough retention to provide your company with stability. It is when the balance tips too heavily toward worker exodus that problems arise. Indeed, dysfunctional turnover often proves to be not just disruptive but destructive.

The good news is, you’re not entirely powerless in the face of dysfunctional turnover. We’re going to take a closer look at the issue. What is dysfunctional turnover and what can you do to prevent or mitigate its influence?

What Is Dysfunctional Turnover?

By definition, dysfunctional turnover occurs when the positive employees in your company are voluntarily leaving at higher rates than the weaker workers. Often, this is considered dysfunctional from the basis of the effect it has on your capital. In short, this means it costs more to keep recruiting and training new employees than it does to retain the most valuable performers.

While the key metrics here are the financial aspects, it’s important to recognize that these costs don’t represent the only concern. Dysfunctional turnover isn’t a problem purely because it eats into your capital. It has consequences beyond this.

These include:

  • Drop in Innovation

High performers in your organization aren’t just those who are most productive. These talented and productive employees also have the potential to innovate on behalf of your business. This is often best achieved when you have conditions in which high performers feel supported, stable, and valued in their positions. They not only have the space to offer new ideas, they actively want to do so as part of a dynamic company.

When you have dysfunctional turnover, you tend to lose these innovators to businesses who are willing to fill the support gap your business is missing.  

  • Loss of Experience

In the best case scenarios, your business nurtures workers through a mutually beneficial journey within your organization. They learn and contribute to key aspects of company activities and culture, while strengthening both. The experiences they gain during their time with you cannot be taught in a course or through training, it is earned and has inherent value. Not only that, but they are able to pass on the benefits of their experiences to newer workers, perpetuating a virtuous cycle.

Dysfunctional turnover disrupts this cycle. Not only do other members of your workforce fail to gain from their colleagues’ experiences, but your competitors may benefit from them instead.

  • Cultural Dissonance

You cannot overlook how important your company culture is to every aspect of your operations. It is a positive bonding influence, helping to make certain everybody is voluntarily acting toward shared goals through shared values. A strong culture occurs when your employees feel there is an authentically mutual respect and consideration between them, their colleagues, and the company at large. It’s about workers wanting to remain with the company because they feel part of something. 

Dysfunctional turnover, on the other hand, creates dissonance within the culture. High-performing colleagues frequently leaving can have a knock-on effect with colleagues. It also disrupts the consistency within the workforce that sustains a community feeling. People don’t want to commit to being part of a family whose members are always changing.     

So, if dysfunctional turnover is bad for your organization, what do we mean by the positive form of functional turnover? What should you be aiming for? 

Functional turnover occurs when there is a healthy shedding of workers who aren’t so positive for your organization while retaining higher performers. Ideally, this is most functional when you’ve worked with these poor performing employees to try and improve the negative aspects of their behavior but they’ve chosen to leave the organization voluntarily. From here, you can bring new and potentially capable candidates into your organization to be influenced and guided by the high performers who feel valued in their positions.

The Reasons for Turnover

To address dysfunctional turnover, you need to gain a better understanding of the reasons behind it. It’s important to recognize that the causes here are often different to functional turnover. The type of turnover that can be good for your organization is generally the result of resigning low performers, employee progression, internal transfers, and retirement. The outcome being turnover that sees you shed ineffective employees and retain the higher performers in some form throughout their career journey.

Dysfunctional turnover, on the other hand, is usually the result of:

  • Lower Pay and Benefits

The most basic reason for dysfunctional turnover is a company’s inability or unwillingness to pay fairly and competitively. Your staff members have put significant time and energy into gaining their unique skill sets. As such, they rightly expect to be compensated fairly for these. Alongside salary, a solid benefits package is a primary contributor to workers’ quality of life. Your high performers know their value to the company. If you fail to provide them with sufficient compensation, they are likely to depart for companies that will.

  • Poor Potential for Advancement

Development and advancement is one of the key priorities for employees today. One recent study found that 94% of workers would stay with a company longer if it invested in their professional education. Your high performing workers don’t want to feel stuck in a role. They don’t deserve this and it’s certainly not in the best interests of your company’s trajectory to keep them static. If there is not a clear path for progression that is driven by solid development protocols, your best employees could leave for businesses that are willing to nurture and progress them.

  • Lack of Engagement

The importance of your workers’ ability to connect meaningfully with your company shouldn’t be underestimated. Engagement occurs across multiple levels. This can revolve around a shared set of ethical values. It can relate to striving toward mutual business or customer service goals. You’ll also find it involves the relationships and bonds colleagues forge with one another. When a high performer finds they are unable or unwilling to engage with your business, it can leave them feeling disconnected and apathetic. As such, they can find it far easier and more desirable to resign in favor of a position with a company they can engage with on a meaningful level.

Seek Meaningful Feedback

Handling dysfunctional turnover isn’t about arbitrarily applying measures to minimize the common reasons for turnover. This is inefficient and may well be ineffectual in the long term. Not to mention that without well-informed direction, it may still cause an imbalance in your costs related to turnover and retention. You need to remember that your company is composed of a unique collection of contributors, their needs and priorities will be individualized accordingly.

As such, it is vital to seek meaningful feedback from your workforce. Gathering engagement intelligence through a range of feedback channels is an effective and agile way to approach this. Employee engagement and experience surveys give you data to pinpoint the particular issues that matter to your high performers and where your company may be falling down. Pulse surveys can help you to home in on specific areas of concern and dig a little deeper for actionable insights. You can also find that anonymous conversation platforms that are always available to workers can both allow them to raise areas of immediate concern and feel their opinions are always valued.  

In essence, your best route to mitigating dysfunctional turnover is by being open to being guided by your employees. They know what is most important to them in a job and they also know that an employer who communicates with them on the subject is committed to making positive change. If you want your workers to engage with you in a way that supports positive retention, engage with them first.

In Summary

Dysfunctional turnover is not just a costly issue, it can also be disruptive to all areas of your business. You need to take time to better understand the differences between functional and dysfunctional turnover so you can establish the right balance in your organization. Recognizing the causes of negative quitting behavior is also key to identifying where your company may be inadvertently pushing high performing workers away.

Most important, though, is working alongside your employees to ascertain their priorities so you can improve retention in relevant ways. If you need help to establish what types of survey questions can provide you the best insights into dysfunctional turnover, you can book a free 30 minute consultation with a Workify engagement expert.