What Is Dysfunctional Employee Turnover?

In 2023, approximately 3.5 million Americans quit their jobs every month. A recent Gallup poll revealed that nearly 50% of employees in the U.S. are looking for an opportunity to leave their current place of employment for a different job. Given these numbers, your organization urgently needs to identify dysfunctional employee turnover risks and mitigate the impact on your operations.

UNDERSTANDING FUNCTIONAL VS. DYSFUNCTIONAL EMPLOYEE TURNOVER
In broad strokes, employee turnover is when your business loses an employee, either because of quitting or workforce reduction. When a trend of dysfunctional turnover develops, it’s often a warning sign of organizational problems.

Functional Turnover: Improving Your Operations
Not all cases of turnover are a bad thing. For example, getting rid of an aggressive employee who makes co-workers feel uncomfortable can improve your team’s morale. As a result, productivity, efficiency, and innovation go up.

Dysfunctional Turnover: Losing Your MVPs
Things are different if one of your company’s “rising stars” or “pillars” decide to quit. These are valuable employees who actively support their colleagues, go above and beyond to make clients happy, and bring fresh ideas to the drawing board. Losing your top talent can be devastating for your business.

Here are a few examples of dysfunctional employee turnover:

• An admired manager quits because of a better job offer
• The top salesperson leaves after the company mandates overtime work
• The entire HR department leaves in protest of a controversial new policy
• A longtime production head resigns due to increased job stress

In all of these cases, the decision to leave can have a significant impact on your operations, usually hurting both short-term and long-term productivity.

MEASURING DYSFUNCTIONAL TURNOVER RATES IN YOUR ORGANIZATION
To tell if your business has dysfunctional turnover, analyze your employment data. Divide the number of employees who voluntarily quit by your total employees at the beginning of the year, then multiply by 100 to get the annual turnover percentage. Do the same with previous years. If the rate is increasing, this usually indicates an issue.

AVOIDING THE NEGATIVE IMPACT OF TURNOVER
Losing valuable employees can cost your organization in many ways:

• Training costs: Finding, hiring, and training new workers costs money and takes time away from productive tasks.
• Loss of expertise: Experienced workers elevate the entire team, enriching your company’s culture and overall capabilities.
• Morale problems: Losing friendly co-workers can be a turning point for other employees who also decide to quit.
• Lost capital: When turnover involves talented individuals who drove revenue to your business, you may notice a sharp reduction in working capital for several months afterward.

There’s no one-size-fits-all solution for dysfunctional turnover, but you can take steps to avoid it by looking for patterns. Is there some issue that is prompting high-quality workers to go elsewhere? You may assume pay is the only factor that matters, but personal well-being and work-life balance are often bigger influencers. Asking workers who quit for feedback directly may be beneficial.

REDUCING THE RISK OF DYSFUNCTIONAL EMPLOYEE TURNOVER FROM THE START
At TSP, we can help your company avoid and recover from dysfunctional employee turnover by finding high-caliber professionals for you. We don’t match just anyone with your projects; we look for top performers who are excited about supporting your organization. Contact us to see the benefits.