Why Chief Supply Chain Officers Should Embrace Employee Turnover

Rather than fighting against employees leaving, companies can turn it into a long-term advantage

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With labor shortages, low employee engagement and retention challenges, turnover among supply chain ranks is here to stay and likely to rise.

According to a recent Gartner survey of 336 supply chain leaders, three-quarters of supply chain leaders expect voluntary turnover to increase over the next five years. While often treated as a taboo subject, could embracing turnover have benefits?

By designing for effective employee exits, supply chain leaders can improve long-term turnover outcomes for the organization. CSCOs seeking to thrive and reduce risk and frustration in the current environment should consider the following reasons for embracing employee departures.

Changing your posture can result in competitive advantages

Encouraging employees to leave, especially during an extended period of supply chain labor shortages, appears to be a radical idea. The core idea that our research identified is that supply chain employee turnover is inevitable and it's better to accept this fact, embrace it and turn it to your advantage by consciously designing for it, rather than actively or passively resisting it.

If your employees are bound to leave your organization, you can design a strategy for that inevitability that benefits both the organization and the departing employee. This minimizes disruption to the business and improves your ability to move and bring in talent—and even bring talent back.

For example, consider building career development plans that include discussion questions around desired career experiences and where they might be found inside or outside of the organization. This might involve enhancing their skills for their current role (upskilling), training to move to a different role in the company (reskilling) or preparing for careers and opportunities in another organization.

This idea is not yet accepted by most supply chain organizations; 59% of supply chain employees told us that their development discussions excluded highlighting external opportunities, while 29% of supply chain organizations surveyed have a culture that perceives departure as disloyalty.

Discouraging employee departures is counterproductive

Retaining an employee is not the same as keeping them engaged and effective. By discouraging employee departures, organizations risk retaining higher levels of disengaged employees and stagnating on key initiatives.

One key idea that can lead organizations to better design for employee departures is the alumni concept associated with educational institutions. The largest accounting and consulting firms do this very well. These organizations celebrate and congratulate their employees on their next moves, which helps to create space to gather feedback on the employee experience in a positive offboarding process. CSCOs can use the information gathered in an exit interview or survey to prioritize key issues within the workforce, create action plans that address these challenges and inform improvements to the employee experience.

Supply chain organizations can advance this concept by creating dedicated alumni networks, and using these networks to send targeted communications, including rehiring pitches aligned to when former employees are most likely to consider a “boomerang” move back to their previous organization. Currently, only 7% of supply chain organizations we surveyed maintain such alumni networks and only 32% engage in any type of alumni activity (See Figure 1).

Figure 1: Level of Investment in Supply Chain Employee Alumni Activities



Attracting boomerang employees is important  

It's expensive to hire and onboard talent, but boomerangs, or former employees returning to a prior organization, can offer a cost reprieve. Maintaining relationships with and rehiring boomerang employees on average can be more cost-effective and lower risk to attract back to the organization than completely new employees. The reasons for this include: 

  • The ability to condense and fast-cycle the recruiting process;
  • A faster onboarding process and time to peak productivity;
  • Lower risk of an early exit due to poor cultural fit, compared with a new employee.

However, most supply chain organizations are not currently designing for such advantages: less than one in five organizations we surveyed currently have a fast-cycle recruitment process for boomerang employees.

Organizations that leverage active employee alumni networks with the aim of reattracting boomerang employees are seeing strong results, with upwards of 10% of new hires consisting of boomerang employees for some departments.

When it comes to talent management, we're all facing the same challenge—an era of high turnover. Turnover is painful, but avoiding it isn't working, and a blind pursuit of retention alone will not deliver optimal talent results.

At the end of the day, employees and organizations alike can get stuck. We can get stuck in a role, stuck in a career or stuck in a loop of consistency without innovation. Employees can gain valuable new insights, skills and perspectives when they work for other companies and industries. With employee turnover permanently higher post-pandemic, supply chain leaders need to embrace the opportunity to improve conditions and translate what has been seen as taboo into a competitive advantage.

About the author:

Dana Stiffler is a vice president and distinguished analyst in Gartner's Supply Chain Research & Advisory group. She covers supply chain talent strategies and the chief supply chain officer role, as well as supply chain university programs.

SC
MR

Most companies resist employee turnover, but embracing it can offer advantages to organizations, including lower onboarding costs when those employees return to the organization. (Photo: Getty Images)
Most companies resist employee turnover, but embracing it can offer advantages to organizations, including lower onboarding costs when those employees return to the organization. (Photo: Getty Images)
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