Though engagement levels are correlated with retention it is important that we don’t mix them up. We know that when the economy slows down people will have fewer opportunities to find great jobs elsewhere and out of necessity will decide to stay with their current employer. We see this in various pockets right now. This is not the same as having an increased engagement level, but rather the contrary. When the economy slows, turnover rates improve, but not really for the better – more people with less motivation end up staying on board. This is very costly for organizations. No one can afford to carry dead weight. True visibility into people performance can of course mitigate this by ensuring that action is taken to increase the right retention, while in parallel also increasing the right turnover – turnover of low performers.

If there is a need to scale down on the number of employees, real visibility into who is to be let go and who to keep becomes even more important. Failure to deal with this the right way will cause a negative impact on engagement levels and ultimately performance and results. What is the cost of decreased turnover of your low performers? More than you think. Not only are they not working to their full potential, and therefore costing the company money, but they also bring down the morale of high performers. Have you ever worked on a team with free rider? Motivation levels fall quickly for the entire team.

Gen-Probe is an admirable organization and a great example of someone that really deals with retention in a textbook way of focusing on the “right” retention and not just retention in general. They hold HR executives accountable for driving the right behavior in their organization – increasing retention for high performers while addressing issues of low performance through active performance management and increased attrition. They even tie part of their executives’ bonuses to these retention and turnover rates reinforcing the importance of this. As we all know, it is very costly to lose great employees but, also consider how costly it is to keep disengaged, low-performers with direct losses of contribution, and potential toxic effects on colleagues across the organization.

So be cautious in this rocky, economic period. If you see that your voluntary turnover rates go down don’t automatically assume that it means improved engagement – in some cases it could actually mean the opposite…