Contributed By

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Bob Maiden, CPA

Partner at Stony Hill Advisors LLC

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Small Business Insights: Employee Turnover is Good for Business

April 19, 2016

You need some level of turnover to bring a broader range of talent and diversity into your company.

Many small business owners play a key role in the human resources function. Even if you have a dedicated HR manager you find yourself actively involved in hiring and firing decision making. It can be disruptive when a key employee leaves the business and expensive to hire and train new employees. However you need some level of turnover to bring a broader range of talent and diversity into your company. We used to boast about our high employee retention rate until I realized it was starting to stifle us. New employees tend to question process and procedures that tenured employees take for granted. They contribute to the growth of the organization by bringing skills learned by experience and backgrounds that are different than the employees they replaced. 

I recently discussed this topic with a former senior VP of Human Resources for a large public company. His comment was in a perfect world 25% of new positions (created by growth or departures) would be filled with people from outside the organization.

Key employees with customer facing roles pose an even greater challenge. The sales function is relationship driven so if John or Mary leaves the business does the customer go with them?  If the answer is potentially a “yes” then you need to broaden the customer relationships. Maybe a project manager or customer service person needs to play a larger role with the customer. In many cases the owner/principals need to play a larger role with key customers. 

One of the most challenging aspects as it relates to new employees is the culture of the organization. Most small companies are tight knit groups of dedicated people who have been in the trenches together. While this is mostly a positive trait it frequently becomes a barrier to the acceptance and inclusion of new staff. Recognizing this problem is the first step in solving it. Putting new hires in positions of authority and implementing ideas based on new hire feedback will help promote a culture that is open to change. 

Much easier said than done!

This article was originally published on LinkedIn.

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Ron Blessing

May 11, 2016

I can agree to this up to a point. I've seen a lot of cases where a new employee decided they knew more than current employees and made changes that had already been tried and failed previously. Different ideas aren't always better ideas. New employees need to learn before acting on new ideas.

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