A CEO said that the staff turnover of 3% was not good and that it should be about 10%.Is it true and why?


Question:
My understanding is that staff turnover is not good as the staff leave because they are not happy with salaries or the Management for othrer reasons. Big staff turnover is a bad reflection of the management.

Answers:
Some companies have an "up or out" policy where they expect employees to either be promoted or to leave the company within a specific time period.

The idea is to keep people from stagnating - they are either growing or they are gone. Companies that have an "up or out" program usually set 10% as the desirable level of turnover to assure that the policy is working.

General Electric (GE) is one company who is known to have this policy in place, and they are considered to be one of the best managed companies in the world.
Strange. I would have thought low turnover was desirable not just for the reasons you state, but also to minimise recruitment and training costs and to maintain the company's knowledge resource.
Depending on the industry trend, yes it could be true and here's why. If the staff are leaving at higher rate, then that helps to keep salary costs down because there are less people getting raises and possibly qualified for benefits.

Management is really only paid for productivity levels, not by the happiness of any employees.

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