Losing a star employee can be a good thing. Say what? 

For the past couple of weeks* we have been reading – and writing – stories about how we’re all going to have to work harder to hang on those good employees and temps because the job market is heating up. They have more choices, there will be lots of job jumping, blah, blah blah.

A couple of organizational behavior experts over in Europe have come out with a counterintuitive viewpoint contending that firms can actually benefit from losing employees.

Surprisingly, Frédéric Godart, Andrew V. Shipilov and Kim Claes found that departures can actually lead to greater performance of the companies that lose them for three primary reasons that they detailed in a report that appeared in the journal in INSEAD:

  1. Gaining information about what competitors are doing is critical. When people move from one company to another they often maintain contact with their former employers, while creating new connections in the new place of employment. These contacts result in an informal communication bridge between the two and through this bridge the ‘source’ can learn what is going on at competitors.
  2. Departed employees can be a source influence in the industry. This is because departed employees expose competitors to the previous employers operating philosophies and principles, which may lead to an increase in the industry’s perception of that company.
  3. Departures enable organizational turnover. When employees and/or temps leave, they provide room for new people to come with their unique experiences from the outside. This brings in fresh ideas, positively impacting creative performance.

The authors cite top consulting companies who know this and do not hesitate to ask their young analysts to leave for a while, before coming back as associates. This is also the raison d’être of MBA programs: provide high-potential employees with new horizons. Let them come back if they wish; some degree of turnover is good for employers and for employees.

Of course, the researchers say too many departures can be bad. They found after a certain point, the loss of too much human and social capital disrupts day-to-day operations.

That is why they recommend companies develop strategies for managing departed talent, in addition to strategies for keeping the existing talent.

Bottom line? Letting some people go is healthy and the biggest beneficiaries of talent loss will be firms which recognize that departed employees and their networks are important drivers of competitive advantage.

“In the 21st century the whole global economy should learn how to benefit from well-managed professional mobility.”

Are you buying it? Or do you think it’s a bunch of BS from some academicians from across the pond who don’t live in the real world? Let us know.

*This classic ST post was originally published on March 8, 2011.

Tags: Business, Quitting, Fired, Andrew Shipilov, Frédéric Godart, INSEAD, Kim Claes