Retention is a terrible metric

I am about to share a very unpopular opinion, feel free to let me know where I'm wrong.

For some time now, I've had a visceral reaction when people tell me that one of the key measurements in HR is retention. Typically, this is followed by a deep dive into the cost of losing institutional knowledge and/or the expense of replacing talent. I do not mean to dismiss those costs—they are real—but they are often far less significant than we expect. Put another way, if this were truly a major problem, we would see less market enthusiasm for layoffs.

The reality is that regrettable attrition can sometimes have positive benefits. Forcing an organization to find a new path forward in the absence of a key employee can create opportunities for new talent and help build greater institutional resilience.

In recent weeks, I've seen several questions that can be paraphrased as, "When will the layoffs stop, and when will the employment market return to normal?" I believe the "normal" people are hoping for refers to a labor market that favors employees over companies. When I respond, I point out that—outside of a few specific hot spots—the reality is that we are unlikely to see that shift anytime soon.

The hard truth you need to hear

The labor market is expecting significant productivity gains in the next decade. In practice, this means increasing pressure to do more with less. Today, that expectation is largely tied to hopes for AI-driven productivity gains. However, even without AI, elite consulting firms are always ready to guide boards and leadership teams toward new models of efficiency—benchmarking companies against the best in the market and identifying where they fall short.

If you understand this market context, you’ll recognize that the true goal is something resembling market-leading revenue per employee. The quickest way to improve that metric is by reducing headcount; the best way is by increasing revenue. With that in mind, consider the ongoing cycle of layoff announcements and ask yourself: Which strategy do most companies seem most ready to execute?

What to do

If you are a business leader or someone in HR, the most productive and compassionate thing you can do is stop measuring success by legacy metrics like attraction, retention, and engagement. In a down labor market, those are feel-good vanity metrics. Instead, focus on metrics that help employees thrive—revenue per employee, growth, and skill development. If you’re not signaling to the workforce that you are their partner in outpacing the market, you are unintentionally contributing to a cycle of workforce reduction.

As people who care about workers, it is our responsibility to recognize how and why work is changing and to create pathways for more people to succeed. Prioritizing retention only to build layoff lists and RIF execution programs is the opposite of progress. The future of work is harder and different—stop trying to convince yourself otherwise, or you’ll waste valuable time.

Let’s invent the future together—one where both work and workers are positioned to thrive. Anything less is harmful.

I believe in us - let's get to work.