Should you be calculating "performance turnover" rather than treating each departure equally?
Writing in Workforce Management Magazine back in May this year, Professor John Sullivan made the case for focusing on performance turnover. As he rightly points out, not all turnover is equal; some turnover is desirable, while other turnover is deeply damaging to the firm.
As I have long stressed, the traditional and most commonly used approach to calculating employee turnover has the potential to be hopelessly misleading, as the emphasis is on the quantity of departures rather than the quality.
If managers are to be assessed and rewarded based on their efforts to minimise turnover, you don't want them to be incentivised to make a special effort to keep onboard unproductive employees.
Professor Sullivan recommends that different weights should be allocated to the loss of a top performer, an average performer and a poor performer. He suggests three, one and zero, as appropriate figures. So the loss of three top performers would result in a performance turnover score of nine, while the loss of three poor performers would produce a performance turnover score of zero.
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