Employees will always come and go, but smart leaders take charge of turnover – and use it to systematically strengthen their workforce. Here’s how to transform the plague of turnover into healthy “churn”:

Conventional wisdom tells us that turnover indicates deep-rooted problems in an organization. We have been taught that when turnover is low it means management is hiring the right people, those people fit in with corporate culture, they are paid well, engaged in their work and feel positive about their jobs.

This can all be true, but low turnover can also be an indication that employees have become complacent. They may be actually be overpaid, underworked and misaligned with corporate values. Not all turnover is bad – in fact, turnover can actually deliver some important benefits for the overall health of a company’s bottom line.

The Chance to Upgrade

It can be difficult to replace a high-performing employee, but not every employee who exits your company falls into the category of an A-level contributor. When a B-Level or C-level employee leaves, look at it as an opportunity to upgrade to a more valuable employee.

A Fresh Perspective

Teams that work together for years at a time can lack a very necessary factor for creative problem solving and innovation: perspective. New employees can offer unique approaches, creative solutions and fresh ideas. Injecting new blood into a group can shake things up a bit, and provide new eyes to examine long-standing problems.

A Healthy Sense of Competition

Long-standing employees often become complacent in their work. They know how much they can produce to stay off the boss’s radar, and over time, they tend to produce only the quality and quantity of work that will maintain the status quo, but nothing more. When new employees join the team, it can ignite a healthy sense of competition in veteran employees. No one likes being outdone by a new employee, and you may find that veterans suddenly find the time and the fire to produce at a higher level.

A Reality Check for Veteran Employees

While terminations can be jarring for every member of the team, there can actually be an upside when you have to fire someone: it reminds the team that no one is irreplaceable. Though it is a harsh lesson to learn, it is an important lesson. Terminating an employee can serve as a reality check to the existing team that they need to step up their game or risk losing their jobs.

Removal of Negative Energy

Negative attitudes in the workplace spread faster than the flu virus. Negativity leads to decreased production, poor teamwork and lowered morale. No one wants to get up every morning and go to work at a place that makes them unhappy. Eventually, great employees will leave because the negative employee is permitted to stay and spread bad energy. Removing a negative employee can do wonders for morale, instantly boosting energy and productivity – and preventing the loss of positive employees.

Cost Savings

Most leaders don’t like talking about this “benefit” of turnover, but losing a highly paid veteran employee can be a help to salary budgets. It’s the reason why companies often lay off their highest-paid employees first when downsizing.

Is Your Turnover Positive, Negative or Neutral?

Should you panic if you notice turnover in your organization? Not necessarily. Here are factors that can help you determine whether your turnover is good or bad for your company:

• Positive turnover: At least 25 percent of all turnover is positive. You can identify positive turnover when a bottom performer exits, when a bottom performer is replaced by a top performer, when a negative employee exits or when good employees who have worked hard are finally able to retire.
• Neutral turnover: Sometimes turnover is neither good nor bad. Types of neutral turnover include turnover among temporaries and contractors, turnover of average performers who provide ample notice and turnover by employees who leave the company due to a life change that cannot be prevented.
• Negative turnover: Yes, some turnover can still be bad. When you see signs of this type of turnover, leadership must take steps to correct the underlying issues. Negative turnover occurs when top performers leave with no warning, when a critical leader leaves, turnover of an employee who possesses the only knowledge or experience in a critical field in the organization, turnover of many employees from the same department (possibly indicated management issues) and new hires that are less talented than the employees they replace.