Chief Investment Officer
BirdsEye Viewposattrition vs. negattrition: why isn't your hr department measuring it?
My good friend, Dana Lorenson, is the HR Director for MidFirst, a great $10 billion bank in Oklahoma. She came up with this new cool term, "Posattrition", whose time has definitely come. Her point is, not all turnover is bad, yet we measure all turnover as if it was. This week's article, co-authored with Dana, explains further this new concept. As always, I'd be grateful for your thoughts and comments.
I just returned from a magical foodie tour to Alsace, France, where I have consumed copious amounts of outstanding food. Restaurant recommendations and notes are posted on BirdDroppings at www.anatbird.com.
Posattrition vs. Negattrition: Why Isn't Your HR Department Measuring IT?
Rarely does a manager relish the idea of conducting disciplinary action on an employee. More often, managers tolerate poor performance and/or bad behavior until they reach the breakpoint, where immediate termination is the only answer. Putting a disciplinary process in place to pave the way to employee rehabilitation or termination is an important first step that if too often omitted. However, in addition to the obvious benefits of documenting performance deficiencies, the disciplinary process communicates to the employee that their job is in jeopardy. The process often causes the employee to voluntarily resign before being terminated. After years of explaining this to managers, HR has managed to convert many of them over to the benefits of this process.
Traditional turnover calculations categorize turnover as "voluntary", meaning the employee resigned, and "involuntary", meaning that the employee was discharged. However, until recently, HR and executive management have been misinterpreting the turnover that results in the final stages of the disciplinary process as "voluntary", simply because the employee resigned before they were fired. A new turnover calculation developed at MidFirst Bank accounts not only for the difference in a true "voluntary" resignation, and a resignation where the employee was about to be fired, but also for the difference in turnover that is considered productive vs. non-productive for the organization.
For years turnover has endured the reputation as a negative event for an organization. Many understand now that not all turnover is bad. There is no recruiting system in the world that is 100% successful, so it stands to reason that some of the employees you hire will not work out, for one reason or another. Trying to reduce turnover simply for the sake of a lower percentage on the board report is a self-defeating goal. We should never try to keep people in the organization that have a negative impact on productivity. In addition, a healthy amount of turnover also brings about an opportunity to introduce new employees into the organization who have a fresh approach and a new outlook on processes, which benefits the company which is interested in continuous improvement.
This new approach to calculating turnover recognizes the elements mentioned above by dividing employee separations into two new categories: Constructive Turnover and Disruptive Turnover.
Scott Mueller, Vice President of Organizational Development at MidFirst, defines Constructive Turnover as "turnover that results in a net gain for the company". This category consists of all discharges, plus those terminations that, while voluntary, occurred while an employee was on a disciplinary action or performance improvement plan. The employees in this category were either underperformers, or were so disruptive to the work environment, that their departure actually results in a more productive workplace. The term that we have coined for this type of turnover is "posattrition".
On the opposite side of the chart is what is "negattrition", or Disruptive Turnover. This is turnover that results in a net loss for the company, where the employee departure will likely result in reduced productivity, based on the absence of the employee's knowledge, skills, abilities, and performance. Replacing this employee will often result in hiring an employee with less knowledge, skill, ability, and performance, and may result in additional strain for the organization, which must absorb the loss. All voluntary turnover that is not defined as "constructive" (posattrition) should be considered "disruptive" (negattrition).
Under this system, when the organization looks to identify an unacceptable level of turnover, the negattrition, or Disruptive Turnover, is the number on which the organization should be focused. This number will include all good performers who left for any reason, including a new position with better pay, relocation, etc. While many HR professionals may argue that some of these reasons for leaving the company are out of the firm's control, do not accept that easy answer. Take relocation, for example. If our organization has worked hard to ensure that employees are challenged, given opportunities, are fairly compensated, and have invested themselves completely in their work, employees are less likely to give that up to relocate. One way to bind employees to the organization is to offer "sticky" features. An example of a "sticky" feature is providing a flexible work schedule, or flextime. When people are able to manage their work and family life to everyone's satisfaction, and have created that balance using flextime, it becomes very hard to leave that arrangement, even for an increase in pay. There are many other creative ways to begin to control and reduce negattrition.
In analyzing Constructive Turnover, or posattrition, if an employee is being asked to improve their performance or behavior, and are unwilling or unable to do so, the organization should not regret losing that person. The appropriate disciplinary process typically results in that person leaving on their own, in order to avoid being fired. When that happens, it's a win/win scenario. Not only do you have the opportunity to find someone who may be a stellar performer for that role, but you can also avoid the liability of a potential termination lawsuit. Plus, the employee will have found a position that is more suitable for them, without a termination on their record.
Calculating posattrition allows the organization to isolate the root cause of unwanted turnover and may provide the impetus for modifying their operational objectives. For example, say a bank has a posattrition rate of 10%. At first, this may seem they have done a very good job of demanding high performance. However, a posattrition rate that is too high may also lend itself to questioning the selection process and the company's ability to screen out mis-cast candidates for the job. At a minimum, this should motivate the bank to analyze their processes and search for solutions that provide a healthy collaboration between selection and performance management. The flip side of this example may also provide similar opportunity where another bank has a posattrition rate of only 1-2%. Although this company may in fact be doing a stellar job of hiring and introducing successful employees into the organization they may also not be doing a good job of holding employees to a high enough performance standard. Again, an in - depth analysis of their processes including their ability to meet or exceed time-tested goals may reveal any cause for worry over their posattrition rate.
The world becomes more competitive every day, and organizations have accepted the fact that, in order to remain successful, they must increase the performance level of the company continuously. Why then, should employees be allowed to do the same thing, in the same way, and be measured with the same yardstick as they have always been? As each of us learn and grow, our skills and abilities should increase along with our knowledge. As we invest in training, add technology and process improvements to that mix, productivity should increase even more. Raising individual performance standards on a regular basis just makes good business sense. Of course, rewarding employees who meet or exceed such standards equally makes good sense.
Ensuring that we have the human resources in place to remain successful is imperative. People who are not able or willing to grow with the organization and continuously improve their performance over time should be given fair warning, through clear expectations and goal-setting, that maintaining status quo is not an option. If they are unable to meet the expectations, then , to be fair to them and to the company, the disciplinary process should be implemented. This will give them the information they need to make a clear and informed decision about whether they can meet the clearly set expectation, or if they should find a position that is more suitable. If they choose the latter, this is posattrition, which is reflected as positive turnover for the organization. Likewise, if they must be discharged in order to make room for a better performer, then that is posattrition as well.
Employers should consider utilizing this new method for defining and calculating separations in order to correctly measure both the positive and negative impact of turnover. It may be the key to a more productive workforce, and will focus retention efforts in the right places.