Are there any drawbacks of a job at a more than five years old company, with 70-90 employees, including 10-15 software developers, where staff turnover is zero only in the software development department?
I know that low turnover is good, but I've never heard of zero turnover.
Limited development opportunities
Without frequent position turnover, there will be significantly fewer development and promotional opportunities for employees with high potential. If you have ambitious and desirable employees, this may actually drive them away.
Lack of determination for more
This lack of determination may mean that the employees will get less development, training, and coaching because it’s not needed in order to retain them.
Less external stimulation
Having low external hiring causes you to lose out on the many benefits that external hires can bring to an organization, including new ideas, skills your workforce doesn’t have, and competitive intelligence. New hires can also serve as a competition catalyst, because current employees feel threatened having to compete with external talent for openings.
Allowing bad managers to go undetected
When your turnover rates are low, it may serve to “hide” your bad managers. During low turnover periods, bad managers look the same as the good ones.
Reduced problem identification
Without frequent exit or post-exit interviews from your employees that leave, the organization misses out on valuable opportunities to learn about what may be wrong with the organization.
Bruce F. Webster spoke to this issue with his 'Dead Sea Effect' blog post.
Admittedly, Bruce was speaking to a slightly different phenomenon, but the principles still apply to your question.
...Even if you do find and hire excellent IT engineers, the real question is: can you hold onto them?
There is an anti-pattern that I’ve seen in large organizations which I have come to call “the Dead Sea effect”. The Dead Sea, of course, is a large body of water between Israel and Jordan, located well below sea level. The Jordan River empties into it; water leaves only by evaporation, which means that over the eons, the Dead Sea has become very salty (e.g., 8x saltier than the ocean). As such, it is generally unable to support life, except when spring floods temporarily lower the salinity.
Many large corporate/government IT shops — and not a few small ones — work like the Dead Sea. New hires are brought in as management deems it necessary. Their qualifications (talent, education, professionalism, experience, skills — TEPES) will tend to vary quite a bit, depending upon current needs, employee departure, the personnel budget, and the general hiring ability of those doing the hiring. All things being equal, the general competency of the IT department should have roughly the same distribution as the incoming hires.
But in my experience, that’s not what happens. Instead, what happens is that the more talented and effective IT engineers are the ones most likely to leave — to evaporate, if you will. They are the ones least likely to put up with the frequent stupidities and workplace problems that plague large organizations; they are also the ones most likely to have other opportunities that they can readily move to.
What tends to remain behind is the ‘residue’ — the least talented and effective IT engineers. They tend to be grateful they have a job and make fewer demands on management; even if they find the workplace unpleasant, they are the least likely to be able to find a job elsewhere. They tend to entrench themselves, becoming maintenance experts on critical systems, assuming responsibilities that no one else wants so that the organization can’t afford to let them go.
I’m painting with pretty broad strokes here, yet I’ve seen this same effect taking place in different companies and different IT shops. Large companies tend to lose the really talented IT engineers and hold onto the less talented ones, when they should been actively seeking to do just the opposite. And the effect tends to be self-reinforcing: the worse an IT shop becomes, the harder it is to get really talented and effective IT engineers to join it and the harder it is to retain them if they do. It can reach a point that the really good talent only comes in as entry-level personnel who don’t know any better — but once they do wise up, they’re gone.
So to answer your question...
Are there any drawbacks of a job at a (more than five years old) company where staff turnover is zero (in the software development department)?
The answer is:
People stick with a job if it meets what they are looking for. There could be several reasons for very low or nonexistent turnover (and a lot will depend on the size of the company - zero turnover in a team of 3 is much less significant than a team of 10). Some are red flags, some are not:
Telling the difference between these is tricky and requires some sensitive probing when you get to the "anything you'd like to ask" part of the interview...
I've been at one place that had pretty much zero turnover for periods of time.
In that case, it was a pretty good shop. There were good people, steady work, competitive pay, and a pleasant environment.
The biggest drawback I found was the lack of advancement. Without people leaving, and almost no hiring, few people were promoted.
I was young at the time, and at that point in my professional career I needed more career growth than the company could provide, so I left after a few years. I joined a far more rapid-paced company that had more typical turnover. For me, it worked out quite well.
Typically, a team that is neither growing nor turning over will have a deficiency in all of the following areas:
Knowledge and capabilities - Yeah, you're always learning and the pace of technology is ever-quickening, but a "stagnant" team working on the same stuff with nothing genuinely new coming in has little incentive to learn any of this new stuff, until the odd, rare problem comes in that the current technology simply won't solve. New guys bring in this knowledge, having seen it in school or other jobs, and share it with the team who find it useful to solve their current problems better, and also solve the pesky ones that have been hanging around, mitigated but not truly resolved.
New perspectives on the job - Similar to knowledge but different, from time to time it's healthy to get a new person in who has a fresh view of the problems your team has been solving. Solving the same problems the same ways day after day, year-in-year-out gets you in a rut of go-to solutions, and you build only slowly on what you know already. New guys suggesting new solutions has a positive effect on the entire team.
Pay raises - If nobody's quitting, then everyone's gaining seniority at the same rate, and so the money available in your boss's budget to pay all of you gets spread relatively evenly. It's very hard to get a bigger department budget from your veep if the reason is for pay raises, especially when retention isn't an obvious problem. Instead, bigger payroll budgets are typically the result of shocks to the payroll numbers independent of the company's bottom line. Ebb and flow in time with the business cycle is expected, and doesn't get you real budget growth; what gets it done is when a couple of key figures in the department leave or issue an ultimatum. The company either entices them to stay and now they make more money that you have to find somewhere, or they leave, and now you have a lot of extra money (even after hiring someone more junior as a replacement) to spread among the people who stayed as "loyalty raises" to prevent further attrition, and then need more money to bring in more bodies down the line.
Advancement opportunities - The "corporate ladder" is a cliched but very accurate phrase; you can't move up to the next rung until the person in front of you either moves up or falls off. If nobody's moving on to greener pastures at any level of the hierarchy, then there aren't any better-sounding, better-paying jobs with comfier chairs and bigger desks to move up into.
Networking - If you're working with the same people all the time, you're not meeting anyone new, and neither are the people you know now. Your network naturally grows when your colleagues go off into the world and meet new colleagues, who become friends of friends that get you that elusive "in" to a business deal or your own new job. This isn't as big a deal if your job involves contact with lots of other business reps, like if your team does consulting or contracting work like turnkey development; every year or three, the business you've been working with calls the project done, packs up and ships out, and a new one comes in to fill the revenue gap, giving you a lot of these medium-term connections that build a network.
All of this stuff makes zero turnover self-defeating. It simply isn't sustainable to have a team getting paid the same amount year after year to solve the same problems. People get bored and quit, "age out" of entry level salary + CoL and quit, get married and quit, move to be closer to their families and quit, and just flat quit. In short, life happens. The U.S. Department of Labor considers a roughly 4-5% unemployment rate to be normal, most of that being rotating elements of the population which are part of the natural "churn" between jobs in the market.
The actual turnover rate is typically higher, as the unemployment rate conceptually only includes people who want a job but don't have one at the time they're asked. People move from job to job relatively seamlessly all the time and so were never "unemployed", and those taking a sabbatical after leaving one job might say they don't want another in the meantime. Average turnover rates in the entire economy hover between 12 and 15% annually, so it's perfectly normal to have a long-term average of up to two in ten employees leaving a company each year. Typically, the less skilled the job is, the more it will churn; it's not unheard of for fast food joints and other service industry jobs to have 100% monthly turnover (doesn't necessarily mean there's no two of the same names on the payroll list, but in a shift with a dozen waitresses, if three of them quit you could spin through 4 applicants each to find suitable replacements). That kind of churn is rare and a huge red flag in the white-collar world, but it does happen from time to time, typically when there's a big middle management shakeup and loyalties get drawn in different directions. Usually, knowledge work turns over at about 5% annually, so it would still be normal to see a guy quit about every two years out of a team of a dozen.
I challenge the basis for the question because the sample matters, and other answers seem to waltz past the basis of the question. Absence of evidence is not evidence of absence.
Rephrasing the question as:
What are the negative consequences of employment with a firm that demonstrates stable employment?
This leads to a certain set of answers. However, it also presupposes that a firm with stable employment eliminates a set of possible negatives in the first place and suggests things about the firm with stable employment that may be observably false.
The things that frequently lead to turnover may exist at a firm, even those firms with stable employment. The employees in question may simply not have acted upon those concerns to this point. Simply because a firm is not replacing employees does not mean the firm is a better or worse place to work than another firm that is or is not replacing employees. The fact that no one has left has no bearing on the existence or occurrence of those common indicators for turnover at other firms. At best, this fact is nothing but trivia without more information.
First, consider the size of the sample. A firm consisting of 10-15 developers does not sound anything like a 'typical' big firm. Answers that point to studies, results, experiences, and statistics for a big firm really do not apply. The firm in this question certainly is not oriented around solo/SOHO development, but it is very different from a 50-developer shop, let alone 100 or 1000.
Second, consider the nature of the sample and nature of the firm. The character and behavior is vastly different between firms that provide software and firms that also provide software. In other words, a 'software shop' is different from a shop that also provides software. Expectations and culture will be extremely different when the success of the larger business depends on your unit, or if your unit is merely a foot in the door or icing on the cake (a coup de grace to a larger effort). In a small shop, this distinction is far less clear but no less pervasive than in a large shop. Are you a financial services company that also provides financial software, or are you a software company that provides software for finance? Each would be quite certainly a different kind of place to work, with vastly different objectives.
Third, a firm that is 'more than five years old' can mean quite a few different things. The two main things it could mean are:
Is it barely more than five years old by mere months? If so, then the honeymoon of 3rd party financing hasn't worn off, and few tough decisions have yet to be made. No one has been made uncomfortable, and budget and design decisions have possibly avoided deep scrutiny.
If it was say, seven years old, has a discernible, physical presence (and not just an email address of PO BOX), an accompanying physical product, and frequent face to face customers, then they have dealt with some of the harder issues. They probably have a few assets they own outright and aren't completely leveraged and beholden. In other words, someone along the way made some tougher decisions that probably had a consequence.
Beyond concerns about the sample, there are plenty of reasons for not leaving a firm, which may or may not have anything to do with the job or the company itself. People do not leave jobs because of one reason. They leave jobs because of an accumulation of reasons, and perhaps one overwhelming, 'final', or 'big' reason. In other words, as long as enough things are going right, there may not be enough opportunity for the employees to register typical reasons and that leads them across that threshold of moving on.
So again, let me state that the sample or circumstance matters. A 'shop' with 10 software developers is not a big shop. Things that cause developers to leave big shops that occur with some statistical frequency may not have occurred yet in the small shop, but being small does not preclude or ultimately protect from it.
The following are just a few reasons outside of the typical 'work' issues that can distort how employees may view a workplace and their job:
First, the community or neighborhoods where the employees live, socialize, work, and possibly send kids to school might be hard to beat. Bad or lukewarm experiences in other places may greatly deter moves or job seeking if they fear that lightening will not strike twice.
Closely related, a close proximity of employees to family or acquaintances they grew up with, or hometown, provides easy access to familiarity or positive shared history. We tend to hang on to the things we know, and the things that worked well. A close, inclusive community providing social support can overcome professional shortcomings and negative concerns experienced as a matter of employment. If the employees are close to home (with mom or dad, or brother or sister, or BFFs) then we might expect that professional concerns be kept at greater perspective such that things that would be a big deal anywhere else are not of much concern. In addition, there is underlying financial incentive to stay within close proximity of extended family or in a hometown as holiday and other 'routine' family travel will be easier and less expensive (which allows fun time and fun funds to be precisely purposed to that end).
Second, the volatility of the industry or job market, and recent experience with cumulative instability (former/recent 'job shoppers' by necessity) may deter people from moving on when they would otherwise be motivated to do so. Job-hunting can be a lot of work. Bouncing around from project to project can be interesting, but leave you unfulfilled and without the opportunity to settle down. After a while, the task of packing and unpacking can become more of a strain than things that may have once 'bothered' someone at work.
Third, an employee invested with their employer beyond their immediate employment can keep them around longer than they normally would. The strong influence of an employee's compensation might stem from their firm's profitability and sustainability (eg. stock or options, or stock or options in a partner or parent).
Similarly related, the employee might incur a 'debt' to the firm if they leave because of conditional up front, incentives received, are receiving, or intend to soon receive (eg. signing bonus, retention bonus, loan forgiveness, sponsorship, indirect advantage simply because of affiliation like credit union or club memberships, and so on).
Lastly, the situation of a significant other in either professional or personal terms may have more consequence, and be less flexible than a set of employees in question. If a spouse or the otherwise object of affection is tied to a job that cannot be easily moved (researcher, civil servant, or any other professional), or the conditions of the spouse's employment depends on the stability of the employee in question (sensitive, confidential, otherwise high trust), the employee in question may be extremely reluctant to move jobs.
Again these are simply a few reasons why the demonstration of 'stable employment' in a small 'shop' who also provides software might be particularly misleading, especially when compared to a larger shop, or a 'software shop'.
