The Ultimate Guide to Reducing Dysfunctional Employee Turnover

So you’re an HR manager, caught neck-deep in the high employee turnover season. Only this time, you have a choice.  Lose high-performing employees or lose the poor performers – which would you rather?

Sounds like a no-brainer, but not all employee turnover is created equal. To adequately address the issue of high employee turnover, which has been a tough nut for HR managers to crack since the pandemic, experts have distilled the problem into its component parts. They have identified the aspect most damaging to organizational success and named it dysfunctional employee turnover

What is dysfunctional employee turnover? 

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Dysfunctional employee turnover is the loss of high-performing employees or those with hard-to-replace skills. 

It is important to note that some turnover is unavoidable, and every organisation will face voluntary turnover (for example, due to retirement or relocation). Employee turnover (the departure of employees and their replacement by new hires) can be categorized into functional and dysfunctional turnover. Functional turnover occurs when low-performing employees leave the organization, while dysfunctional turnover happens when high-performing employees quit at higher rates than low-performing ones.

High rates of dysfunctional turnover can harm an organization’s bottom line, as it takes resources away from critical, strategic activities and directs them toward constant recruitment and training. 

Calculating the dysfunctional turnover rate can help organizations understand the extent of the problem. The formula for calculating the dysfunctional turnover rate is:

Dysfunctional Turnover Rate = (Number of High-Performing Employees Who Left / Total Number of Employees Who Left) x 100

The true extent of damage that high dysfunctional employee turnover inflicts on organisations has been well-documented, ranging from high cost to strengthening the competition.  The rest of this article will focus on strategies and steps organisations can take to effectively combat the issue, reduce dysfunctional employee turnover and retain top talent.

Strategies to Reduce Dysfunctional Employee Turnover

To address dysfunctional turnover, HR managers need a strategic approach focused on the root cause of the problem. Often, these strategies involve organizational upheavals in policies and practices, which might seem challenging initially, but they pay off eventually. Here are some actionable strategies that organizations can use to reduce dysfunctional employee turnover:

1. Improve Employee Engagement

Engaged employees are less likely to leave their jobs. Organizations can keep employees more engaged in their roles by offering competitive compensation and benefits and fostering a positive work environment. Another practical way that HR managers can improve employee engagement is by offering regular feedback and intentionally recognising employee achievements using personal touches like handwritten notes, for example. 

2. Develop a Strong Company Culture

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Research from Deloitte shows that an overwhelming number of executives (94%) and employees (88%) agree that a distinct workplace culture contributes positively to business success.  A strong company culture can help employees feel connected to their organization and motivated to stay. Companies can commit to building a strong culture by clearly communicating their values and mission, promoting teamwork and collaboration,  providing a supportive work environment, and using company merch to provide tangible affirmation that employees belong. 

3. Implement Effective Performance Management Processes

Effective performance management processes can help employees understand their roles and responsibilities, set goals, and receive feedback on their performance. This can help employees feel more engaged and motivated to stay with their organization.

4. Provide Opportunities for Advancement

Employees are more likely to stay with an organization if they see opportunities for growth and advancement. Organizations can provide opportunities for advancement by offering training and development programs, promoting from within, and providing clear career paths for employees, which can in turn boost employee retention rates.

5. Reduce Turnover in High-Performing Employees

High-performing employees are often the most valuable assets of an organization. Organizations can reduce turnover in high-performing employees by recognizing their contributions, providing opportunities for growth and development, and offering competitive compensation and benefits.

By implementing these strategies, organizations can reduce dysfunctional employee turnover and improve retention rates. However, it is important to remember that reducing turnover requires a long-term, strategic approach that addresses the underlying causes of the problem.

Investments in Employee Growth and Development

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Investing in employee growth and development is a crucial aspect of reducing dysfunctional employee turnover. It is essential to provide employees with growth opportunities, career development, and development initiatives to foster professional growth and career progression. The Employee Expectations Report 2021 highlights that while employees responded positively to the job security employers were able to provide during the pandemic, many are now concentrating on their future career prospects.

One way to invest in employee growth is by providing development opportunities that align with the employee’s interests and skills. This can be done by creating a development plan that outlines the employee’s goals, the skills they need to develop, and the resources available to achieve those goals. The development plan should be reviewed regularly to ensure that the employee is making progress towards their goals and that their development needs are being met.

Another way to invest in employee growth is by offering training and development programs that are relevant to the employee’s job and career goals. These programs can be in the form of workshops, seminars, online courses, or mentoring programs. By providing these programs, employees can acquire new skills and knowledge that they can use to improve their job performance and advance their careers.

Investing in employee growth and development also demonstrates a commitment to employees’ value and fosters loyalty. Employees who feel valued and supported are more likely to stay with the company for the long term, reducing the turnover rate. Additionally, investing in employee growth and development can lead to increased productivity, better job performance, and higher employee engagement.

In summary, investing in employee growth and development is a crucial step in reducing dysfunctional employee turnover. Providing growth opportunities, career development, and development initiatives can foster professional growth and career progression, demonstrate a commitment to employees’ value, and lead to increased productivity and employee engagement.

Promoting a Positive Work Environment

One of the most effective ways to reduce dysfunctional employee turnover is to promote a positive work environment. A positive work environment is one where employees feel valued, respected, and supported. Here are a few strategies that employers can use to promote a positive work environment:

Foster a Positive Company Culture

One of the keys to promoting a positive work environment is to foster a positive company culture. This means creating a workplace where employees feel like they are part of a team, where they are encouraged to collaborate and share ideas, and where they feel like their contributions are valued. Employers can foster a positive company culture by:

  • Encouraging open communication
  • Recognizing and rewarding employees for their contributions
  • Offering opportunities for professional development and growth
  • Providing a safe and healthy work environment

Provide Meaningful Work

Employees are more likely to stay with a company when they feel like their work is meaningful and has a positive impact. Employers can provide meaningful work by:

  • Clearly communicating the company’s mission and values
  • Providing opportunities for employees to work on projects that align with their interests and strengths
  • Encouraging employees to take ownership of their work and make decisions
  • Providing regular feedback and recognition for a job well done

Support Remote Working

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Remote working has become increasingly popular in recent years, and it can be a great way to reduce employee turnover. By allowing employees to work from home or other remote locations, employers can offer greater flexibility and work-life balance. To support remote working, employers can:

  • Provide the necessary technology and equipment for remote work
  • Establish clear guidelines and expectations for remote work
  • Offer regular check-ins and support for remote workers
  • Encourage remote workers to stay connected with their colleagues and the company culture

By promoting a positive work environment, employers can reduce dysfunctional employee turnover and create a more productive and engaged workforce.

Human Resource Management and Dysfunctional Employee Turnover

Human Resource Management (HRM) plays a crucial role in reducing dysfunctional employee turnover. HRM is responsible for hiring, training, compensating, managing, and retaining employees of an organization. It is essential to have an effective HRM strategy in place to ensure that employees are satisfied and motivated to stay with the organization.

The HR manager is responsible for identifying the causes of dysfunctional turnover and developing strategies to address them. One of the key roles of HRM is to ensure that the organization’s policies and practices are fair and equitable. This includes ensuring that employees are paid fairly, have access to training and development opportunities, and are provided with a safe and healthy work environment.

Innovation is also an important aspect of reducing dysfunctional employee turnover. HRM should encourage innovation and creativity among employees by providing them with the necessary resources and support. This can include providing employees with access to new technologies, encouraging collaboration, and providing incentives for innovative ideas.

In summary, HRM plays a critical role in reducing dysfunctional employee turnover. By developing effective strategies to address the causes of turnover and promoting innovation and creativity among employees, HRM can help to create a satisfied and motivated workforce that is committed to the organization’s success.

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