Competitive advantage is largely generated by the resources and capabilities of a firm's internal strategic assets. It should not be surprising, then, that continuity of employment is a critical ingredient in long-term quality improvement. Many American companies, including those seemingly dedicated to quality improvement, fail to consider the implications of employment and job continuity. Consequently, these companies pursue contradictory policies that severely reduce the probability of achieving their goal of continuous quality improvement. This article examines alternative courses of action for firms seeking quality improvement when faced with the reality of high employee turnover.