Zero percent turnover (sometimes)

Apr 29, 2019

If you want to run a successful firm, there are employees you just have to keep. But in other instances, turnover can be a good thing.

Employees are our lifeblood in this business. Without our people we would not be able to serve our clients and deliver on projects. In today’s tight labor market, especially in rural areas, recruiting top talent is expensive, redirecting time and resources away from projects and firm strategies. In high-intellectual industries like ours, employee turnover rates higher than 10 percent are brutal. When employees leave, they take their knowledge, their license, their planned billable hours, and client relationships with them. However, turnover is not always bad. It is important for a firm to acquire new ideas and experience through hiring new employees.

A firm expects turnover in positions like engineers-in-training, who are intent on acquiring as much experience as possible, and administrative staff, who desire growth and promotion faster than the firm can support. Our best option is to plan employee turnover in the lower-level, higher supply positions and with the lower performing employees, and to strategically retain higher-level, lower supply licensed individuals and high-performance employees.

Creating a strategic employee turnover and retention plan, which identifies the employees and the positions you want to (must) keep and those you do not, can reduce unexpected turnover and unnecessary recruitment costs, positively impacting the bottom line.

To begin creating a turnover and retention plan, the firm must have a current strategic plan. This plan should identify the firm’s service regions, clients the firm will serve, and services the firm will provide. If you are a director of a market sector or department and your firm does not have a strategic plan, draft one for your own department. There are a lot of resources on the web on how to write a strategic plan.

Once you know the firm’s (or department’s) target regions, clients, and services, evaluate your current staff. Identify employees and positions critical to fulfilling the strategic plan. If these employees left the firm, the strategic plan would require modification. Write their names down under a “0 percent turnover” (or 100 percent retention) heading. Next, identify employees who model the firm’s core values who have strong performance. These are the employees you would clone if you could. Write their names down under the “0 percent turnover” heading.

Now that you have identified the individuals you want to retain, review the positions you expect a higher turnover in. These positions are easier to fill and less likely to hurt the bottom line when open. These positions may be easier to train as well. While reviewing the remaining employees, identify employees who are typically considered “toxic.” These are employees who are expensive to manage and who are typically involved with complaints. Write names of the “toxic” employees and those in the higher turnover positions under a heading labeled “strategic turnover.”

Now begin to plan strategies around retention and turnover. The “0 percent turnover” employees are the ones the firm will want to focus on with retention strategies. There are many research articles addressing ways to retain employees. The more difficult question is how to manage turnover while minimizing surprises and reducing unexpected costs.

While you expect some turnover, you want it on the firm’s terms, meaning you want to be in control of it. Some firms require some positions to leave after a period of time. This practice was formed after being “plagued” by irregular and unpredictable turnover in these positions. As explained in “A Market-Driven Approach to Retaining Talent” by Peter Cappelli, “he firms now know who will leave and when, and can design key projects to coincide with analysts’ tenures.”

Another strategy is to create a culture that encourages entry-level employees to leave the firm to gain additional experience. Let employees know they are welcome back after gaining experience elsewhere. Demonstrate this by rehiring former employees who left on good terms. You can also begin conversations with employees to discuss a plan and timeline for their career. Most entry-level employees are thinking about their next move to gain experience and will share it with you if open communication and trust are established. It is common in today’s world for the younger generation to travel and explore before settling down. When there is trust and support, these employees will give plenty of notice, allowing the firm ample preparation time.

Turnover is inevitable and is in fact good at times. How a firm plans for turnover and retention will impact culture and correlate with the firm’s financial performance.

Kara Clower is the Business Manager at LACO Associates. She can be reached at She welcomes connection invitations on LinkedIn.

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