Another well-known company with a similar forward-thinking approach is Netflix. Renowned for its creativity and productive culture, the company is driven by a simple management philosophy: Give people freedom, hold them responsible and replace the ones who can't or won't perform in that environment. "The only way to get high talent density is to get rid of the people who are out of their depth or coasting," says Adrian Cockcroft, Netflix’s director of cloud architecture.
5. Stay competitive.
According to Australian American media mogul Rupert Murdoch, “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow." The advantage will therefore flow to those companies that can recognize industry-changing events, project consequences for their companies and quickly adapt to the new environment.
Companies with static employment will invariably fall prey to the Peter Principle: a proposition describing an organization where a significant number of employees have been promoted to a level beyond their abilities and are unable to compete effectively with more dynamic, "hungrier" competitors. Encouraging turnover for employees who are happy with the status quo, least willing to take appropriate risks, or unable to learn from their mistakes will energize your workforce and give you an edge on the competition.
Without careful analysis, employee turnover ratios are not reliable indicators of either the dynamism of an organization or the effectiveness of its HR department. There’s no ideal or “best” turnover rate for any company, no rules of thumb or measures by which to make easy decisions about the "right" number of employees.
Superior leaders review turnover in relation to the company's production and profitability goals and develop and implement policies to ensure the best people are hired, trained and motivated to continuously excel on a personal and professional level. The proof is in the pudding, as they say — not in blind adherence to the recipe.
Michael Lewis is a retired business executive and writes about personal finance, technology, and the economy on Money Crashers.