Is employee churn necessarily bad?

Companies exert massive amounts of effort to retain employees, whose time spent at a single firm is shortening every year. Dozens of new products and services are popping up to help in this endeavor. Solutions focus on everything from compensation benchmarks (i.e. Compete) to tools that mark employees’ birthdays.

The reason that companies are so obsessed with retaining employees is obvious; it’s directly connected to the cost of acquiring and training talent, and the loss of knowledge that goes with people who leave.

Logic would suggest that if market conditions enabling employees to easily hop between jobs triggered this massive focus on employee wellbeing, if and when those conditions change for the worse, employee satisfaction will become less relevant.

But the fact that the tech industry’s becoming a buyer’s market is the main trigger behind this trend is not a good sign for employees working at so called “people first” companies.

Is employee churn necessarily bad?

There are companies at which employees tend to stay for many years — much more than the industry average. Some of those companies take a lot of pride in their managing to retain their people for so long. Without getting into the reasons that some employees stay in their jobs for many years, and whether or not it can be attributed to the company’s efforts, it’s not necessarily a positive situation for the company.

Companies that don’t feel as though they’re constantly on their toes tend to neglect fundamental things, such as: building good processes; documenting and sharing knowledge; building an effective hiring machine; diversifying their teams with other companies’ culture and norms; and even disregarding employee wellbeing.

Successful growing tech companies are based on their execution, not on the talent of a specific key employee. That’s why some companies succeed and some fail, though both have access to exactly the same talent pool.

The fact that tech employees are going to stay at their jobs for an average of 12-18 months is costly. This, however, made companies shift their focus to building infrastructures for healthier, more robust execution machines.

Unlike the popular marketing slogans that talk about how companies are “putting the employee at the center,” the fact is that they are becoming “company first” companies, and that’s very good for everyone.