How to break the cycle of churn and burn: An employer’s guide

How to break the cycle of churn and burn
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Some leaders view business as a battlefield; their motto is “Get results or die trying.”

They expect employees to hit nitro-boosted levels of productivity if that’s what it takes to meet targets. If those targets prove elusive, the goals aren’t the problem – the employee is. They just weren’t motivated enough.

This is an approach often associated with rapid cycles of hiring and firing and catastrophic rates of employee burnout, and it’s best known by the term “churn and burn.”

In this blog, we walk you through what a churn and burn culture looks like, the negative impact it has on your long-term business objectives, and how you can turn your own churn and burn workplace around.

What is churn and burn culture?

“Churning and burning” refers to a workplace culture in which employees are drastically overworked. The stress of this situation leads to high rates of burnout and employee turnover: Team members either quit due to stress or are fired for missing unrealistic expectations, only to be quickly replaced with new workers. 

This rapid turnover of employees prevents working conditions from improving because employees are not around long enough to effectively unionize.

Churn and burn culture can be organization-wide and enforced by senior management. For example, the British fintech firm Revolut caused controversy in 2019 when news spread that the executive team displayed a blatant churn and burn attitude.

The company’s chief executive officer Nikolay Storonsky announced to all staff via Slack that those performing “significantly below expectations” would be fired immediately after their employment review – a classic churn and burn tactic.

However, churn and burn culture can also be localized to specific teams, especially ones that are affected by budget and job cuts but are still under pressure to perform. 

This occurs frequently in the legal profession. Just under a quarter (24%) of in-house legal teams state that their headcount has been reduced in recent years despite continuous increases in their workload.

It’s no surprise, therefore, that 92% of lawyers say they have experienced burnout with nearly a quarter reporting they experience it on a daily basis.[1]

There is evidence that the Covid-19 pandemic exacerbated issues of churning and burning since many organizations responded to the financial pressures of lockdown by encouraging their employees to do more with less. 

Indeed, the Great Resignation was fuelled by toxic workplaces. Many of the top reasons for employee resignations in 2021 were related to pressures common with churn and burn environments, including unsustainable work expectations and uncaring leaders.

graph showing top reasons that workers quit their previous job

Source

The telltale signs of an organization that’s churning and burning through its staff

Churn and burn is a sign of a deeply unhealthy workplace. While the flu gives you a high fever and a headache, a churn and burn culture also has clear symptoms for employees.

High turnover

As you might guess, high employee turnover is the clearest symptom that this is an issue in your workplace. This turnover can take several forms, including dismissals, resignations, early retirements, or even stress-related medical emergencies.

A well-known example is when e-commerce giant Amazon reached a crisis point for retention in 2021 when at least 50 vice presidents were reported to have quit, a turnover of over 10% for that level.

The crisis may have been even more severe than that. Some former employees alleged that turnover in Amazon’s cloud division was over 20% in 2021 and over 50% in some major areas of Amazon Web Services. 

Though both of these figures were disputed by Amazon representatives, if true, they indicate that the organization’s turnover is higher than average for the sector. For comparison, here’s the average turnover across different sectors, showing the proportion of voluntary and involuntary separations in 2017.[2]

Industry sector

Average turnover

Alleged turnover in Amazon Web Services

50%

Consumer Goods

21.5%

High-Tech

20.9%

Transportation Equipment

20.4%

Services (Nonfinancial)

17.4%

Logistics

16.8%

Banking/ financial services

16.0%

Insurance/ reinsurance

15.5%

Life sciences

14.5%

Chemicals

12.6%

Energy

11.8%

Presenteeism and burnout

Burn and churn is often talked about like it’s a supervillain’s master plan: “You see, Mr. Bond, I simply overwork the employees so they quit before they can organize. That way, wages remain low while productivity stays high!” 

In reality, while greed from the top is a factor, so too is the fact that many churn and burn workplaces are staffed by pools of engaged candidates thirsty to prove themselves. 

Let’s say you have a highly skilled candidate who is passionate about the work they do and wants to go above and beyond to get results. If you give this candidate the resources they need to complete a project, for instance:

1. A supportive team 

2. A sufficient budget 

3. Ample time 

4. Wellbeing support

… then they will be able to do amazing things and exceed expectations.

However, if you take away these resources by:

1. Understaffing their team

2. Cutting their budget

3. Shortening deadlines

4. Disregarding their wellbeing

…all of that energy is diverted into meeting these (unrealistic) expectations and keeping their head above water. No amount of espresso shots can help someone keep up with that sort of pressure.

In the beginning, these candidates may do it because they want to prove themselves, but over time these conditions cause stress and burnout. Research supports this: In a study of 1,000 US employees, one in five was highly engaged but at risk of burnout.[3] 

In fact, those who were passionate about their work reported stress and frustration and had the highest turnover rates of the entire sample.

One way you might notice this showing up is through presenteeism, the act of employees forcing themselves to work even when they’re unwell if they fear they’ll be accused of slacking. It’s often caused by factors, including:

  • Poor mental health 

  • Workplace bullying

  • Financial pressures 

  • Being subjected to unrealistic time pressures at work

…all of which are common in the churn and burn workplace.[4]

While it might be most obvious when working in an in-person office, e-presenteeism is also an issue, with more than three-quarters of HR professionals in 2021 saying that they had seen presenteeism even in individuals working remotely. 

While this does initially drive productivity and profits, the long-term result is employee burnout, which comes with its own costs. One Stanford study found that employee burnout is responsible for $190bn in spending – that’s 8% of national healthcare outlays – and almost 120,000 deaths a year.[7]

Low morale and productivity

Understandably, this kind of high-stress working environment can have long-lasting effects on team members, from working-from-home depression to workplace trauma.

These mental health challenges add to the decrease in productivity after the initial period of high engagement, which ramps down further as employees begin to drop out of the workforce and leave their colleagues to struggle under even heavier loads.

Of employees that were surveyed, 74% say that their productivity declines after layoffs, and 69% say the quality of the company’s product or service declines too.

The long-term negative effects of a churn and burn workplace

Because of the initial spike in productivity when new employees come on board, organizations with a churn and burn culture often think they benefit from this mentality.

However, this is a very short-sighted view. 

Here’s how your business fares if the symptoms we described above become terminal.

Loss of money 

As we mentioned above, toxic culture is driving the Great Resignation, and almost three-quarters (73%) of Fortune 100 company chief executive officers agree that a worker shortage disrupts their businesses.

It also disrupts their profits. Repeated hiring and firing is the equivalent of bleeding money – many studies support that retaining existing workers is far cheaper than hiring new ones. 

For instance, one case study showed that retaining a salesperson for just one more year, alongside implementing better onboarding and management practices, yielded a difference of $1.3m in net value to the organization over three years.[5]

Another effect of churn and burn that dents your profitability is the drop-off in productivity after that initial spike of engagement due to your employees becoming exhausted. 

When it comes to employee engagement, it pays to promote high engagement over a long period. Companies that score in the top quartile for employee engagement are 23% more profitable than those in the bottom quartile, and Gallup estimates that low engagement alone costs the global economy $7.8tn.[6]

Finally, firing employees for not meeting unrealistic expectations could open your organization up to costly wrongful termination suits. Ex-employees who succeed in bringing a wrongful termination lawsuit could win anything between $5,000 and $100,000.

That’s just for individual terminations – class action lawsuits can easily multiply that by a hundredfold or more. It’s simply not something worth gambling on.

And the problems only snowball from there.

Failure to attract promising talent 

As well as potentially losing money from hiring, low engagement, and lawsuits, you’re likely to find it increasingly difficult to attract top talent due to the damage these things do to your employer brand.

Thanks to platforms like Glassdoor and LinkedIn, ex-employees have more power than ever to influence your reputation in the talent marketplace, and employees who have been burned by your culture can directly impact your image to new candidates. Nearly two-thirds of jobseekers read at least five employee reviews of an organization before applying.[7]

Business roadblocks due to controversy

Finally, the reputational damage done to your organization by adopting a churn and burn attitude not only turns away individuals who want to work for you, but also organizations that you want to work with.

Take the example of Revolut: After the allegations of a churn and burn culture broke by ex-employees, the company experienced hesitancy from financial regulators in the UK about whether they should be allowed to hold deposits and start lending to customers, both essential steps in their growth plans.

Clearly, the consequences of rampant churning and burning are dire for your business. But where does all of this really come from?

What’s the root cause of a churn and burn culture?

In short, churn and burn culture is rooted in toxic leadership. Leaders are given free rein to make unrealistic demands of their teams, assert pressure to meet round-the-clock deadlines, and erode the work-life balance of their employees. But this toxic culture doesn’t come out of nowhere.

As we’ve mentioned briefly above, churn and burn culture thrives in industries where workers are passionate and eager to make their mark. This might be because the incentives are large – for instance, high commissions in a sales team or the potential for growth with early startups. 

It might also be because the work closely aligns with an employee’s personal passions. Tech is often touted as a burn and churn playground, but the creative industries are also rife with it, particularly among junior employees.[8]

Economic pressures can also exacerbate the effects of churn and burn culture. During the pandemic, many businesses went into “survival mode,” causing many employees to feel the need to step up their game or be subject to layoffs.

However, these pressures are not insurmountable. With the right HR strategies, organizations can sidestep the pitfalls of a churn and burn culture and achieve sustainable growth in a way that promotes a positive company culture.

Breaking the vicious churn and burn cycle: 7 best practices

7 best practices to breaking the churn and burn cycle infographic

Churn and burn workplaces might be rooted in toxic leadership, but they’re enabled by lackluster HR support that leaves workers to fend for themselves. 

Many leaders believe they are responding in the only way they can to the pressures in front of them, whether that’s keeping a business afloat during a recession or raising another round of funding.

HR professionals are well-placed to counter these assumptions because they have the ability to not only identify the issues but propose and execute strategies for dealing with them. Here are seven of the strategies you might use to break the cycle of churn and burn culture and replace it with a positive and supportive working environment.

Breaking the churn and burn cycle: Summary table

Need to defuse a toxic churn and burn culture as quickly as possible? We’ve got you covered – here’s a quick breakdown of our tips.

Churn and burn recovery strategies

Example actions

Get your leadership team on board

Encourage leaders to role model self-compassion, particularly if they work with direct reports

Use skills-based hiring to attract and maintain a diverse workforce

Hire for “culture add” rather than “culture fit”; Use skills testing to reduce bias in your screening process

Create opportunities for growth from failure

Replace public shaming of failing employees with constructive 1:1 feedback sessions; Use failures to meet goals as opportunities for upskilling; Promote a teamwork mentality

Promote work-life balance for all employees

Set guidelines around when employees need to be contactable and get leaders to role-model these; Give employees guidance on how often to take breaks during work. Implement a flexible working policy

Create a supportive and inclusive workplace culture

Set up employee support groups for those in stressful roles; Provide non-traditional benefits, like financial planning workshops to alleviate money worries

Train line managers in psychologically safe management practices

Create a rewards system for managers to reward their employees’ success; Set up a task force to specifically tackle a toxic culture

Set up a safe reporting and accountability system

Use anonymous reporting tools to give employees a way to provide safe feedback

1. Get your leadership team on board

As with any ambitious HR initiative, the first step is to convince your leadership team that there’s a problem and that the change starts with them.

Research repeatedly shows that leaders role modeling key behaviors is essential to creating a people-first workforce. In other words, you need your executives to show their human side.

One study found that when leaders outwardly engage in self-compassion, they help others with both their work tasks and their personal issues, and stakeholders consequently perceive them to be more competent.

The study found that the effect was particularly strong for novice leaders lower down in the structure, so focus this advice on managers who have direct reports in churn and burn teams.

2. Use skills-based hiring to attract and maintain a diverse workforce

One characteristic that many teams caught in a cycle of churning and burning share is that they are homogeneous in the way that they think, with new hires being chosen because they “fit” the culture – or, in other words, because they don’t challenge it.

Hiring more diversely can help break up this hivemind effect. One way you can do this is to use skills-based hiring practices to attract and retain a more diverse workforce by removing bias from your hiring process.

In particular, you should replace the concept of “culture fit” in your hiring with “culture add,” aligning your teams around shared values and goals rather than superficial attributes.

This commitment to diversity of perspective helps to reduce turnover because higher levels of gender diversity and the presence of HR policies focused on this issue have been linked to lower employee turnover in many organizations.

3. Create opportunities for growth from failure

Setting realistic goals is obviously key for reducing the effects of churn and burn, but managing how leaders view these goals and react when they aren’t met is equally important.

Many churn and burn cultures rely on individuals taking public responsibility for failures, perhaps being called out for poor performance in front of colleagues. Replace this practice with more constructive opportunities for feedback and growth, such as through regular 1:1 meetings between team members and managers.

You’re likely to see a big improvement: Weekly feedback from managers has been shown to drastically improve employee engagement.[9]

When an employee misses a target, instead of expecting them to figure it out for themselves, use it as an opportunity for upskilling. Ask questions like: 

  • What skills were they lacking that would have helped them reach this goal? 

  • Where can they find support in developing these?

  • How can we readjust their goals and provide support as they develop these skills?

Again, taking this approach does wonders for employee engagement. One study by McKinsey found that organizations that align their HR practices with the skills needs of their employees boost engagement by 50%, lower training and development costs by half, and raise productivity by 40%.[10]

What’s essential here is taking ego out of the equation and reminding employees that whether they succeed or fail, they do it as a team. Harvard researchers found that failure only made people less likely to learn if they felt self-conscious about it, ignoring the learning opportunity to preserve their egos.[11]

4. Promote work-life balance for all employees

You should also work to promote a sensible work-life balance for all employees. At first, you might do this by offering guidance on how to set healthy boundaries in the workplace, for instance:

  • Implementing an official policy on out-of-hours emails

  • Giving employees guidelines about how frequently they should take screen breaks and for how long 

  • Implementing flexible working policies to allow employees to take control of their schedules and better manage their own work

It’s worth paying extra attention to working parents when crafting these initiatives, particularly if you’re working on moving out of a churn and burn culture. Working parents are often unfairly penalized in churn and burn environments for needing to take time out for their caring responsibilities. 

Make sure that you craft initiatives with their needs in mind, like extending your company’s policy on parental leave or offering childcare on days when they need to be in the office.

How to support parents in the workplace infographic

Source

5. Create a supportive and inclusive workplace culture

In addition to implementing the above policies to reduce the amount of stress you put on your employees, you should also implement wellbeing initiatives to ensure that they feel valued and supported when this stress is unavoidable.

This not only improves morale but also boosts productivity.

You might do this by setting up employee support groups for individuals who are in high-stress roles to empathize with one another and seek advice.

You might also ensure that more formal mental health and burnout support are available through your company’s health insurance plan and ensure that all employees are made aware of this when they are hired.

Other non-traditional employee benefits you might consider to reduce burnout include:

  • Running debt management and financial planning workshops in the workplace to alleviate any money worries that might make employees work themselves too hard

  • Mental health perks like mental health days to reduce presenteeism and allow employees the space to reset when necessary

  • Physical wellness and nutritional programs, such as discounted pricing for healthy meal delivery or online fitness class subscriptions for remote workers

6. Train line managers in psychologically safe management practices

As we mentioned briefly when we discussed getting leaders on board with tackling toxic culture, middle managers have a key role to play in dismantling a churn and burn workplace.

You should offer training to your line managers on how to minimize toxic behaviors and create a psychologically safe workplace. Empower them to reward employee success with more than just the promise that they won’t be fired.

If your organization has particularly suffered from burn and churn in the past, you might even take a leaf out of Revolut’s book and set up a behavioral team specifically to tackle toxic culture.

In 2023, the company announced that it had hired psychology and behavioral science experts as part of a suite of measures to tackle the fraught working environment that had caused turnover to spike and tarnished its employer brand.[12]

7. Set up a safe reporting and accountability system

Finally, and perhaps most importantly, set up a safe way for employees to hold their leaders to account.

One of the biggest factors perpetuating churn and burn culture is that employees lack the avenues to speak up, even to one another, because their speech might be censored by management.

We know this sounds very Big Brother, but it’s true: In April 2022, leaked internal documents revealed Amazon’s plans to ban words like “union” and “pay raise” from their new employee chat app.[13]

Even when they do raise concerns to management, employees might even be met with retaliation, particularly if their concerns directly implicate their manager.

You can bypass these risks by implementing anonymous reporting tools for when employees witness concerning behavior but do not want to launch a formal complaint. 

Combined with a transparent review process for handling this feedback, this enables employees to raise issues without fear of retaliation and see that their feedback is valued by your organization.

Replace churn and burn with learning and growth

Churn and burn isn’t always the work of an evil mastermind at the top of an organization who wants to grind their employees down. More often than not, it’s the result of a combination of pressures that, without support in place to steer the ship, bring out the worst in leaders.

By putting HR strategies in place to break the feedback loop of churning and burning while promoting healthier attitudes for target-setting and work-life balance, you can get your organization back on track.

If you’re still fighting fires in the workplace and trying to mediate disputes within a churn and burn team, read our guide to resolving workplace conflict.

If you’re ready to launch the training initiatives your employees need, read about how skills-based methods can help you develop your workforce.

Or if you’re ready to break the cycle of a churn and burn team with a fresh perspective, use our Culture Add test to hire the best.

Sources

1. Lennox, Jamie. (May 19, 2022). “92% of lawyers have faced stress or burnout, study finds”. Today’s Conveyancer. Retrieved March 06, 2023.

2. Agavino, Theresa. (February 23, 2019). “To Have and to Hold”. Society of Human Resource Management. Retrieved March 06, 2023.  

3. Moeller, Julia; Ivcevic, Zorana; White, Arielle E; Menges, Jochen I; Brackett, Marc A. (January 23, 2018). “Highly engaged but burned out: intra-individual profiles in the US workforce”. Career Development International. Retrieved March 06, 2023.

4. Van Stolk, Christian; Baruch, Ben. (May 22, 2015). “Health, Wellbeing and Productivity in the Workplace”. RAND Corporation. Retrieved March 06, 2023.

5. Josebachvili, Maia. (August 29, 2016). “How to understand the ROI of investing in People”. LinkedIn. Retrieved March 06, 2023.

(2022). “State of the Global Workplace: 2022 Report”. Gallup. Retrieved March 06, 2023.  

(August 31, 2020). “The ROI of Employer Branding”. Glassdoor for Employers. Retrieved March 06, 2023.

8. Christian, Alex. (January 12, 2023). “The companies that churn through young workers”. BBC Worklife. Retrieved March 06, 2023.

9. McLain, Denise; Nelson, Bailey. (January 1, 2022). “How Fast Feedback Fuels Performance”. Gallup Workplace. Retrieved March 06, 2023.

10. Jost, Gregor; Kirchherr, Julian; Pfülb, Sebastian; Rupietta, Kira. “Using skill gap assessments to help future-proof your organization”. McKinsey Organization Blog. Retrieved March 06, 2023.  

11. Harrell, Eben. (May 2020). “Maybe Failure Isn’t the Best Teacher”. Harvard Business Review. Retrieved March 06, 2023.

12. Makortoff, Kalyeena. (January 16, 2023). “Fintech firm Revolut assembles behavioural team after criticism of its corporate culture”. The Guardian. Retrieved March 06, 2023.

13. Konya, Andrew. (June 07, 2022). “Amazon’s Reported Censorship Plans Raise Questions About Corporate Surveillance”. ReWorked. Retrieved March 06, 2023.

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