Conquering Employee Turnover Costs

Managers have embraced catchy slogans, bonus and incentive programs, $40.00 posters and pep rallies in efforts to make their employees feel like family members. The effort has often worked—at least for a while—but employee dissatisfaction often surfaces again. The price for employee unhappiness ranges from listless performance on the job, to lost customers and in the employees’ defection to competitors. We must conquer this expensive enemy, especially as the labor market heats up again.

Finally, measuring results is easy!

The Stealth Quality Series is written to suit a wide range of organizational managers. The articles describe subjects, explain the spreadsheet tools and include instructions with enough detail to empower even nonskilled spreadsheet users to succeed in real time analysis, today.

I admire the ability to make a fiscal justification for dealing with employee retention.

I fear, however, that the managers who are most guilty of "pushing" the exodus of workers from their organizations are exactly the ones who will NOT be open to using tools to document the costs the actions (or non actions) of those managers detract from the bottom line.

In my long career, I have seen an incredible range of employee policies in different organizations, ranging from near slavery to stifling paternalism and everything in between.

I have often wished for the [figurative] two-by-four or stick to hit some managers in the head to get their attention. Sadly, some organizations are destined to die before the managers get the miracle message that THEY are the problem. Sometimes not even then. I have seen some "serial abusers" rebound to get another manager position or start another business and repeat the grim cycle all over again.

Perhaps even worse for the employees are those organizations which remain marginally profitable and continue to hemorrhage profits with each disappointed employee who leaves and with him all training and experience which could have continued to give value to the organization.

I have been present at owners and managers association meetings to hear some jerks actually brag about the petty tortures they inflict on their employees.

Jennifer's concept of using metrics with employee rention/turnover is wonderful. I just wish there was a handy way to force managers who need it the most to use it, heed the results, and subsequently change their nonprofitable ways.

Jennifer, this is a great paper!! Thanks!!!!

Wes Bucey said:

I admire the ability to make a fiscal justification for dealing with employee retention.

I fear, however, that the managers who are most guilty of "pushing" the exodus of workers from their organizations are exactly the ones who will NOT be open to using tools to document the costs the actions (or non actions) of those managers detract from the bottom line.

In my long career, I have seen an incredible range of employee policies in different organizations, ranging from near slavery to stifling paternalism and everything in between.

I have often wished for the [figurative] two-by-four or stick to hit some managers in the head to get their attention. Sadly, some organizations are destined to die before the managers get the miracle message that THEY are the problem. Sometimes not even then. I have seen some "serial abusers" rebound to get another manager position or start another business and repeat the grim cycle all over again.

Perhaps even worse for the employees are those organizations which remain marginally profitable and continue to hemorrhage profits with each disappointed employee who leaves and with him all training and experience which could have continued to give value to the organization.

I have been present at owners and managers association meetings to hear some jerks actually brag about the petty tortures they inflict on their employees.

Jennifer's concept of using metrics with employee rention/turnover is wonderful. I just wish there was a handy way to force managers who need it the most to use it, heed the results, and subsequently change their nonprofitable ways.

Click to expand...

Wes, your approval matters because I deeply respect your knowledge and wisdom.

Yes, indeed--so true, so true! If I had the right chemical that brings people to their senses, I would ensure it gets fed to the cows so it gets to people through the milk--almost everyone gets some at some point in their lives!

Until then, I give you the answer I have been delivering to many, regarding the futility of spewing information for the (non)benefit of the Ignorant By Design group: "I do it so I could say I did."

In other words, certainly nothing is gained if no effort is made. An esteemed colleague of mine used to give his low key advice, knowing full well it would be studiously ignored. When things fell he would then turn a deadpan face and offer, "Would you like to try a new way?" I respect him for that ability as much as any technical prowess.

I think the problem's root is in our tendency as a society to be less than methodical, and to revere heroes enough to light fires so we can stamp them out.

There is little training to do otherwise. I took a college class titled Decision Making Using Computers (it's where I started my spreadsheet tool craze) and the students as a whole exhibited discomfort with the process. They have not been taught how to make a list, score results or make rational, durable decisions based on facts. Quantitative and qualitative analysis. Move on to business school, and this long-range view subject may still be scarce. Certainly it doesn't look like MBAs are leaving with these skills.

Students and business owners should be getting this information quite early, when turnover is so painfully expensive they actually want to control it. A few will grasp it and benefit from it, and eventually I hope demand will grow. Certainly I see nothing else out there like what I make: a tool box to manage the concepts that so many consultants prattle about in articles, even in national professional magazines, and leave the reader saying, "So what do I do?" So, having identified a niche I keep prying at it. One day, the thing's gotta budge!

Next up: Arresting Absenteeism.

Craig H. said:

Jennifer, this is a great paper!! Thanks!!!!

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Craig, you are so welcome. I worried this one would seem too long, but turnover really is an involved subject. Teaching spreadsheets at the same time as quality is also time/space consuming. I constantly worry at once about being too detailed or not thorough enough.

When I make enough of these things, I shall publish them in a book I suppose.

Jennifer,
IMHO, a very interesting paper just like part 1. As I read the paper I felt like going back through my career. What struck me most are the following two points,

• Today’s young employees seem more demanding. They are too impatient to “pay their dues” and grasp the hard truth: they can’t make money until their employers make money first. Why don’t they understand?

• If they feel they will be “pigeonholed” in dead-end jobs with no clear achievement trajectory or raise structure, these workers may decide their best means of upward mobility is to change employers. Is this happening in your organization?

I think that these two points may be applied to all age groups with to day’s shifting of economies and standard of living. The quality of life has changed dramatically, moreover loyalty towards employees seems to be deteriorating, pension schemes in particular seem to be a thing of the past, job security seems to be a thing of the past to.
Having said that your articles are mind openers to management levels with the added benefit of providing tools to correct systems deficiencies, well done.

sal881vw said:

Jennifer,
IMHO, a very interesting paper just like part 1. As I read the paper I felt like going back through my career. What struck me most are the following two points,

• Today’s young employees seem more demanding. They are too impatient to “pay their dues” and grasp the hard truth: they can’t make money until their employers make money first. Why don’t they understand?

Click to expand...

This may be putting the cart before the horse. Who lost touch with the social contract first? I believe the organizations became less conscious of the value of an employee once they were able to break a few unions. Once the employee realized the real LACK of relationship between the employee and employer, it was simple to understand no loyalty was due and it was "get as much as you can as fast as you can" because the employer would find a way to take undue advantage of the employee.

• If they feel they will be “pigeonholed” in dead-end jobs with no clear achievement trajectory or raise structure, these workers may decide their best means of upward mobility is to change employers. Is this happening in your organization?

Click to expand...

Perhaps not even "pigeonholed" - merely parked temporarily - operative word being temporarily.

I think that these two points may be applied to all age groups with to day’s shifting of economies and standard of living. The quality of life has changed dramatically, moreover loyalty towards employees seems to be deteriorating, pension schemes in particular seem to be a thing of the past, job security seems to be a thing of the past to.

Click to expand...

Not only the security for the job, but the security and existence of the corporation, as well. It may be only anecdotal, but it seems to me that corporations are failing or being swallowed up by other corporations at a much faster rate than ever before. I think of organizations that were HUGE who have disappeared from existence - Chase Manhattan Bank, TWA, Eastern Airlines, United States Steel, Chrysler, Packard, Standard Oil, Railway Express, and so on.

Having said that your articles are mind openers to management levels with the added benefit of providing tools to correct systems deficiencies, well done.

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Yep. Jennifer does good work.

Wes Bucey said:

This may be putting the cart before the horse. Who lost touch with the social contract first? I believe the organizations became less conscious of the value of an employee once they were able to break a few unions. Once the employee realized the real LACK of relationship between the employee and employer, it was simple to understand no loyalty was due and it was "get as much as you can as fast as you can" because the employer would find a way to take undue advantage of the employee. Perhaps not even "pigeonholed" - merely parked temporarily - operative word being temporarily. Not only the security for the job, but the security and existence of the corporation, as well. It may be only anecdotal, but it seems to me that corporations are failing or being swallowed up by other corporations at a much faster rate than ever before. I think of organizations that were HUGE who have disappeared from existence - Chase Manhattan Bank, TWA, Eastern Airlines, United States Steel, Chrysler, Packard, Standard Oil, Railway Express, and so on.

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Wes has cracked the code.

David Sirota, co-author of "The Enthusiastic Employee" proclaims that loyalty to employees is now dead.

I am not seeing dealth of loyalty in small businesses. They can't afford to keep fishing the labor market. However, there's still some misunderstanding of the workforce dynamics. They plaintively cry, "The Maine work ethic is dead."

What does this mean? I suspect it is less a demise of work ethic (though there is certainly a cynical and sometimes narcissistic current happening) than a loss of relevancy. Young people are asking their teachers in class, "Why are we learning this?" and, to their dismay, usually receiving no better answer than "It's a standards requirement."

I agree with Richard Florida's observation, that today's workers desire a sense of self in their work. They want their work to have personal meaning and fulfillment if possible. A thankless stint at a machine will be short lived. Restless young people are already choosing lower paying creative jobs than, for example, a machinist's position. I am seeing it here, where good-paying CNC positions are going begging.

There are exceptions, of course. Some people still max out at the security level, never desiring dreamy ambitions or fanciful vocation notions. Many special education people will stay in a less satisfying position if they are not rejected as defective people but embraced as loyal, if somewhat limited employees.

Organizations can choose their devil. I really believe it is coming to that, and I aim to make it clear in my writing. I aim to offer the tools to make sound decisions for those who sieze upon the urge to try it and not engage in that slow motion Blind Man's Bluff employment game.

When it comes to employee treatment, motivation and so forth, I still regard the work of Frederick Herzberg, Chris Argyris, Rensis Likert as seminal: especially Mr Herzberg, with his trilogy. Back that with other work by Mary Parker Follett, Elton Mayo and Douglas MacGregor and we see very little has changed in the workplace or in how employees should be treated if the company is not to incur the egregious levels of avoidable cost concomitant with high churn.

Ms Kirley is quite correct in trying to discuss the situation as churn is as much a result of a defective quality program as is a faulty batch of products. ISO 9K, naturally, lacketh the wit to recognize the problem

AllanJ said:

When it comes to employee treatment, motivation and so forth, I still regard the work of Frederick Herzberg, Chris Argyris, Rensis Likert as seminal: especially Mr Herzberg, with his trilogy. Back that with other work by Mary Parker Follett, Elton Mayo and Douglas MacGregor and we see very little has changed in the workplace or in how employees should be treated if the company is not to incur the egregious levels of avoidable cost concomitant with high churn.

Ms Kirley is quite correct in trying to discuss the situation as churn is as much a result of a defective quality program as is a faulty batch of products. ISO 9K, naturally, lacketh the wit to recognize the problem

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I recall that ISO 9K is rather a democratically rendered standard. Who knows what got edited out over the process so the body would approve it? If internal customer satisfaction were an element, it could feel pretty scary to some management structures. Too prescriptive, perhaps.

For this need we have Baldrige, both at the national level and at state level in many cases. Unfortunately the award system depends on perceived value to attract applicants and the state organizations are subject to the same management foibles as any organization can be. Both internal and external customer satisfaction in that process varies as a result and some state versions are no doubt sleeping in our current economic conditions.