Can low employee turnover be a bad thing?

Low employee turnover rates could be a bad sign for the economy.

Low employee turnover rates could be a bad sign for the economy.

It may seem counterintuitive, low employee turnover could actually be a bad sign for the economy. While preventing turnover is one important goal of HR departments, there are other factors that lead employees to stay that might not actually be in the best interest of the company or the economy as a whole. 

Employee turnover can negatively impact a business' bottom line, as money is lost on training employees only to have them leave. There are steps that HR departments can take to help reduce turnover, like offering competitive compensation and a strong company culture to ensure that employees are satisfied.

But employees might not be staying for the right reasons. According to an article in the Washington Post, the fact that fewer people are being fired or quitting their jobs could mean that the economy is not doing well. As the article details, the reports detailing the net creation of jobs also account for positions that have been left for one reason or another. 

For this reason, the article explains, the number of people being laid off and quitting, as reported by the Department of Labor, is 21 to 26 percent lower than it was two decades ago. This could mean that employees are afraid to leave unsatisfying jobs. When employee turnover rates are higher, it can actually be a good thing, because it means people are willing to try out different positions to find the job that's best for their talents. Some employees may be continuing to stay in positions that are not necessarily well-suited to their talents. 

HR departments can take steps toward finding the right talent for the job right from the start of the hiring process. With HR software solutions, departments can easily organize and manage candidate details needed to make more informed hiring decisions.