Generally, there are three different types of companies (yes, there are many more than three, but stick with me here):

  1. Growing
  2. Declining
  3. Steady

If your business is declining, the need for turnover should be obvious. Whether it's being overstaffed in back-of-the-house positions relative to the amount of business you currently have, or realizing your sales team isn't succeeding at an acceptable rate, people need to go.

If your business is steady based on your industry, product, service, or niche, then your turnover will be the occasional replacement.

If you are a growing company, you should not take pride in having low turnover. It's a marketing trap that many, many companies fall into. "Come join our growing company--we have almost no turnover and are growing like crazy." It's insane to think that's a good thing. 

There isn't a growing company on earth that bats 1.000 in hiring, and you shouldn't want to. Even when you think you have a good hire in a certain role, you know for certain only after you hire an additional person to perform the same role and see how they do. And in a high-growth company, it isn't one person you're adding in the same job or even two. It's 10, 20, or 100 people. And when you are comparing at that level, you need to have turnover.  

When you default to saying, "We are so busy, we need the people," you are purely validating my point. If you are hiring to simply hire and don't have turnover, you are actually saying short-term growth is more important than quality output. Everyone can't be a rock star. Remember, even the Beatles had Ringo. And he was their second drummer. 

Hire people. Fire people. Show your team that you and your management team aren't perfect. No one is. Saying you got fooled during the hiring process is better than admitting you got fooled as a manager. I've worked with thousands of companies and hiring managers who are afraid of letting people go because of the optics. What a mistake. The optics of being viewed by your good people as a weak manager who won't cut someone who isn't good is a far worse optic. 

Both new and seasoned managers suffer from the same disease: ego-itis. Either you believe you can fix the person (big ego), or you don't want to confront them, and show you know best in that it's time for them to move on (small ego).

"They may just need a little more time ..."

They also may not be right for your organization. They may need a dose of reality to be successful somewhere else, and that is OK. If your company is going to succeed because of only one employee, then perhaps you need to figure out a new business model. And if the person is fantastic somewhere else, good for them. It doesn't mean they would have been terrific for you. Be happy for them and move on. 

Now, there are two types of turnover: desirable (fired) and undesirable (quit). However, there are really two types of undesirable--those who quit on their own and those who are managed out. The latter is good, and the former, not so much.

When you fire someone, you are saying their level of output or their attitude isn't what you want. It says to the rest of the team, "We have expectations." It's demotivating to good staff when they see someone with a bad attitude stay employed, or when they're killing it with their output and see someone put in the bare minimum and stay employed. That can be even more demotivating. 

The best managers know that letting people go is part of management. If it were about only the good employees, there wouldn't be bad managers. Job skills evolve or they don't. The roles within a company change. Not everyone is equipped to grow for what is needed for the company.

It's no different from kids playing sports. If the Pee-Wee football players never grow, they either move to a new position if they have those skills or they find a new sport. Same in business.

To scream how great your company is because you have no turnover is really saying that you don't hold people accountable and marginal employees are accepted.