“Always do right. It will gratify some people and astonish the rest.” – Mark Twain

Employment experts will sometimes tell you that the lower your employee turnover is, the stronger your company is. If you accept this claim, you are going to be attracted to all kinds of schemes that aim at making employees happy.

I don’t agree with the goal of zero-based turnover, and I certainly don’t think you should spend a lot of time trying to make your employees happy.

If hiring were an exact science, you could hire nothing but smart, hard-working, loyal, and emotionally stable people. But it’s not. What that means, in my experience, is that even those who are really good at hiring don’t do better than, say, 75% when it comes to getting really good people.

Personally, I’m good for one out of two. Some of my colleagues would put my score considerably lower.

Whatever the ratio is, there will be some number of the people you hire who will turn out to be rotten eggs. Some of them will leave on their own accord. And some you’ll want to fire.

How many? That depends on how many really good people you hire and how many bad/mediocre employees leave.

Let’s take a case where your hiring batting average (rate per thousand of really good hires) is 500. You hire 10 people this year. Five, you’ll want to keep. The other five, you’ll want to lose. Because of how hard you work them, three leave on their own. That means you’ve got to fire two, or 20%.

If you do better than 500 … say 700 … and two of the duds leave voluntarily, you’ll still have to fire one person — or 10% of your hires.

You can see why I think a 100% retention rate is crazy.

That’s my take on firing. But what about keeping the good people? How can you make them happy and keep them from leaving for other jobs?

In past ETR messages I recommended the following:

* Overpay your best people by at least 10%.

* Give them all the resources they need — they won’t abuse them.

* Provide them with flexibility — they won’t take advantage.

* Give them unique benefits — they’ll appreciate them.

But most of all, give them your faith, your approval, and a worthy challenge. Good employees respond more to those three benefits than all the other gimmicky goodies put together and multiplied.

All that said, what do you do when a very good employee wants to leave? Bronwyn Fryer, in an article in the Harvard Business Review, says you should do pretty much anything you can to keep him. And that includes making a generous counteroffer.

I quite agree, but it should be said that the counteroffer policy is a slippery slope. Though you often can keep a good employee by matching or exceeding the money he’s been offered elsewhere, it sends out a message that you are (a) paying less than you should in the first place and (b) are decent with pay only when you are forced into it.

My recommendation is that you avoid the situation by overpaying a really good employee in the first place. If you have any idea that he is out there looking, bring him in and give him some kind of increase — but do it before he resigns. How much can you “overpay”? Well, if you possibly can, pay him enough so that if one of your competitors attempts to hire him, he will be discouraged. If you can’t do that, do what you can.

Do that and then do the other important things. Tell him how much you value his work. Find out from him if there is some way you can make his job more challenging. Make sure he knows you trust him and believe in him. These are the things that create loyalty.

If you do all that and he still resigns for a higher-paying job, you can let him go with an invitation to come back in a year when he realizes that he’s better off where he’s appreciated. I’ve done that too … and it works damn well.