Have you ever questioned why some of your best workers depart while some of your worst ones remain at your company? If this is the case, dysfunctional attrition may be your issue.
When your high-performing workers leave at higher rates than your weaker staff, it’s known as dysfunctional turnover. This is referred to as dysfunctional because it has an adverse effect on the efficiency and revenue of your company.
According to a Gallup research, businesses with high employee turnover can eventually see declines in productivity of up to 51%, profitability of 16%, job growth of 37%, and share price of 65%. Not to mention the expenses associated with hiring, training, and replacing new employees, which can be anywhere between 50% and 200% of their yearly salary.
So what steps can you take to stop or reduce dysfunctional change in your company? What are the primary reasons behind this phenomenon, too? In this article, we’ll provide you with the answers to these queries as well as some useful advice on how to keep your best employees and boost your company’s performance.
Read on to find out more!
How to measure dysfunctional turnover?
You must understand how to evaluate dysfunctional turnover before you can address the issue. You can determine the severity of the problem, the areas that require development, and the success of your retention strategies by measuring dysfunctional turnover.
Calculating your dysfunctional turnover rate is one method to assess dysfunctional turnover. This is the proportion of high-performing workers who quit your company voluntarily over a specific time frame.
To calculate your dysfunctional turnover rate, you need to:
- Establish the characteristics of a high-performing individual in your company. You can base your decision on factors like peer recognition, customer feedback, productivity metrics, and performance evaluations.
- Find out how many of your organization’s top performers left on their own accord during a specific time frame. (e.g., a month, a quarter or a year).
- Subtract the total number of high-performing workers at the start of the period from the number of high-performing workers who departed.
- To calculate your dysfunctional turnover rate as a percentage, multiply the figure by 100.
For example, if you started the year with 100 high-performing workers and 10 of them departed on their own accord, your dysfunctional turnover rate would be:
(10 / 100) x 100 = 10%
Comparing dysfunctional and functional turnover is another method to assess dysfunctional turnover. Functional turnover is the voluntary departure of underperforming or problematic workers from your company. This is referred to as functional because it enhances the productivity and revenue of your company.
To compare functional and dysfunctional turnover rates, you need to:
- Define what makes a problematic or low-performing employee in your company. Criteria like performance evaluations, productivity measures, customer complaints, disciplinary actions, etc. are all acceptable.
- Find out how many problematic or underperforming employees left your company voluntarily over a specific time frame. (e.g., a month, a quarter or a year).
- Subtract the total number of low-performing or problematic employees at the start of the period from the number of low-performing or problematic employees who departed.
- To calculate your functional turnover rate as a percentage, multiply the figure by 100.
For instance, if you started the year with 50 poor or problematic employees and 5 of them quit on their own accord, your functional turnover rate would be:
(5 / 50) x 100 = 10%
Understanding whether you are losing more valuable or less valuable workers can be determined by comparing the functional and dysfunctional turnover rates. A greater functional turnover rate is preferred to a lower dysfunctional turnover rate. This indicates that you are letting go of more low performers while keeping more top performers.
However, if your rate of functional turnover is greater than your rate of dysfunctional turnover (or if both rates are high), you have a retention and satisfaction problem that needs to be resolved right away.
According to some studies , average annual voluntary employee turnovers across industries range from 15% (education) to 31% (hospitality). These figures, however, do not distinguish between functional and dysfunctional turnovers, so they might not truly depict how well a company is retaining its best employees.
Because of this, it is crucial that each organization establishes its own standards for gauging and contrasting functional and dysfunctional transitions based on the standards set by the industry, its business objectives, its workforce expectations, etc.
What are the main causes of dysfunctional turnover?
Dysfunctional turnover can have many causes, but some of the most common ones are:
- Lack of career development and growth opportunities: High-performing workers are frequently ambitious and driven to grow professionally, acquire new skills, and take on new challenges. They may search for other employers who can accommodate their needs and ambitions if they feel their current company does not provide them with enough chances to advance professionally and personally. A LinkedIn survey found that 94% of workers would remain at a business longer if it supported their professional growth.
- Poor leadership and communication: Effective leaders who can plainly communicate, establish realistic goals, offer constructive criticism, recognize accomplishments, delegate duties, resolve conflicts, and promote collaboration are essential for high-performing teams. They might stop believing in, respecting, talking to, or engaging with their company if they believe their leaders are incompetent, micromanaging, distant, unfair, or indifferent. In a Gallup study, managers were found to be responsible for at least 70% of the variation in employee engagement ratings between business divisions.
- Low recognition and appreciation: Employees who perform well put forth a lot of effort to meet and even exceed standards. They may become frustrated, demotivated, and unhappy with their work if they feel that their organization does not recognize, value, or reward their efforts. A study by O.C. Tanner found that 79% of workers who leave their employment do so for lack of appreciation.
- Burnout and overwork: Employees who perform well frequently have lofty expectations for both themselves and other people. Additionally, due to their competence, they might be given more work than they can manage or more work than other people. They may feel stressed, worn out, anxious, or depressed if they believe their task is too heavy, unrealistic, or unbalanced. This may have an impact on their efficiency and productivity as well as their physical, mental, and emotional well-being. 77% of professionals have at some time in their current employment experienced burnout, according to a Deloitte study.
- Toxic workplace culture: High-performing workers flourish in welcoming and supportive work environments where they can feel respected, valued, supported, and empowered. They may lose morale, confidence, and devotion to their organization if they believe that it has a hostile or negative workplace culture that includes discrimination, harassment, bullying, gossip, and favoritism. A survey by SHRM (Society for Human Resource Management) found that 20% of workers have quit their jobs in the last five years because of the workplace culture.
These are some of the major reasons why high-performing employees may choose to quit your company on their own and result in dysfunctional turnover. Nevertheless, each worker may have a different reason for leaving depending on their unique circumstances, preferences, and goals.
Therefore, it is crucial that every organization conduct exit interviews, surveys, analyses, etc. to determine the reasons why its high-performing employees leave. This can assist you in locating the particular problems that have an impact on your employee satisfaction, engagement, etc.
How to prevent or reduce dysfunctional turnover:
Dysfunctional turnover can negatively affect the productivity and revenue of your company. As a result, it is imperative to prevent or minimize it by putting into practice some efficient retention strategies. Here are a few strategies to help you keep your top performers content and devoted to your business:
- Offer career development and growth opportunities: Employees who perform well desire to advance both personally and professionally. You must therefore give them the chance to develop new skills, face new challenges, and advance in their careers. By offering them training, coaching, mentoring, feedback, career paths, promotions, and other opportunities, you can achieve this. By assisting them with their education, hobbies, volunteer work, etc., you can also motivate them to pursue their interests outside of work. They may feel motivated, satisfied, and appreciated by your company as a result.
- Improve leadership and communication: Effective leaders who can plainly communicate, establish realistic goals, offer constructive criticism, recognize accomplishments, delegate duties, resolve conflicts, and promote collaboration are essential for high-performing teams. As a result, you must enhance both your own leadership and communication abilities as well as those of your supervisors. By offering them leadership development programs, communication workshops, feedback sessions, recognition programs, etc., you can achieve this. You can also involve them in decision-making processes, ask them for their thoughts and recommendations, pay attention to their worries and grievances, etc. This can help them feel more trusted & respected with your organization.
- Give recognition and appreciation: Employees who perform well put forth a lot of effort to meet and even exceed standards. You must therefore recognize, value, and reward their efforts. You can accomplish this by giving them verbal compliments, written thank-you notes, awards for public recognition, etc. Additionally, you can provide them with material gifts like bonuses, incentives, perks, and benefits. They can also have their accomplishments, landmarks, birthdays, anniversaries, etc. celebrated. They may feel more content, happy, and proud of their work as a result.
- Prevent burnout and overwork: Employees who perform well frequently have lofty expectations for both themselves and other people. Additionally, due to their competence, they might be given more work than they can manage or more work than other people. To avoid burnout, overwork, stress, exhaustion, anxiety, depression, etc., you must take preventative measures. By offering them flexible work schedules, such as remote work, telecommuting, fluid hours, compressed weeks, etc., you can achieve this. You can also keep an eye on how their workload is distributed, prioritized, etc. Additionally, you can nudge them to take breaks, such as holidays, vacations, sick days, and mental health days. This can support them in maintaining their performance and productivity as well as their physical, mental, and emotional well-being.
- Foster a positive workplace culture: High-performing employees flourish in warm, upbeat workplaces where they can experience support, and empowerment. Because of this, it’s crucial to foster an environment at work that values things like diversity, equity, inclusion, belongingness, respect, and trust as well as encourages innovation, creativity, and fun. You can accomplish this by establishing clear values, a vision, mission goals, policies, procedures, norms, behaviors, expectations, etc. Additionally, you can promote group activities like challenges, events, parties, games, and team-building exercises. This can help them feel like they are a part of a community, family, squad, or other group that has similar interests, aspirations, or passions.
These are some of the ways that you can improve your company’s results by retaining its best talent and preventing or reducing dysfunctional turnover. However, depending on its industry standards, business objectives, employee expectations, etc., each organization may have different requirements for adopting these solutions.
As a result, it is crucial that each company tailor its retention strategies based on its unique situation, evaluation, measurement, and other factors.
Food for Thought
When your high-performing workers leave at higher rates than your weaker staff, it’s known as dysfunctional turnover. Your company’s profitability and efficiency may suffer as a result.
You need to put in place some efficient retention strategies that can help you keep your top talent satisfied and devoted to your business in order to avoid or reduce dysfunctional turnover. Several of these tactics include:
- Offering career development and growth opportunities
- Improving leadership and communication
- Giving recognition and appreciation
- Preventing burnout and overwork
- Fostering a positive workplace culture
By applying these solutions, you can improve your employee retention , satisfaction , engagement , productivity , profitability etc.
We hope that this article has provided you with more information about dysfunctional turnover, including what it is, how to measure it, what the main causes are, and how to prevent or reduce it. Please feel free to post any questions or comments in the space provided below. We’d be thrilled to hear from you!