Keeping the cost of doing business down, yet providing a quality product or service, is one of the most critical components of success for today's leader. What many fail to realize is that employee turnover can represent a very substantial price tag to a company's productivity and its bottom line.
Turnover is costly ? just how costly? Research studies have shown that the cost of replacing a professional or managerial employee runs 1.5 to 3.0 times his or her annual salary. And it can cost up to five times annual salary if you are looking at the intellectual capital ? what a key person knows ? when he or she walks out the door.
For example, to replace a $50,000 top notch sales person with a large customer base can cost you $171,500. And a $150,000 technical manager can ultimately cost $380,000 to replace. That's no small pocket change.
Therefore, in almost any business situation -g rowth, downturn, merger, or even stability - it makes business sense to retain your best people. Here are four steps to get you started:
Therefore, target key jobs that are critical to long-term company success. High priority positions are those that require extensive knowledge of customers, products or services, especially where there is a long learning curve. The cost of turnover is often highest for these strategic jobs.
Focus groups and employee surveys are effective ways to obtain real time employee feedback; to identify the 'push' and 'pull' drivers of employee satisfaction; and to develop realistic solutions.
Then, examine the data for the key reasons people stay and leave. Do further research on selected individuals or employee segments. The person who left because their spouse got a fantastic job in a different city may not be worth further exploration. But the outstanding performer who left for 'better opportunities' or 'personal reasons' may be worth a follow-up call, even a year or so after.
An Example
In one company, a detailed analysis revealed that 30% of its IT and 40% of its MBA new hires were leaving in less than 36 months. It then estimated both the direct and indirect costs for these segments. And it came out to a whopping $1.5 million dollars.
Focus groups were conducted with current and departed IT / MBA employees. Compensation and benefits were not the key turnover drivers, but rather, the day-to-day work was not challenging. These young 'bucks' were bored and fearful of losing their edge. In addition, supervisors lacked basic management skills and were unable to state clearly performance expectations or provide meaningful feedback. Only then could solutions be developed to deal with the real causes of employee dissatisfaction.
No One Magic Bullet
Employee retention is an extraordinarily complex issue. What I have consistently found is: That it's NOT the money. When someone leaves for 'better opportunities', what has happened is that certain dissatisfactions - like the ones above - caused the person to put out feelers, or to become curious about recruiter calls, or to start surfing the job boards.
Make sure this is not happening with your key people - the most critical, difficult-to-replace, top-performers - because they are the ones you can least afford to lose.
Marcia Zidle, the 'people smarts' coach, works with business leaders to quickly solve their people management headaches so they can concentrate on their #1 job to grow and increase profits. She offers free help through Leadership Briefing, a weekly e-newsletter with practical tips on leadership style, employee motivation, recruitment and retention and relationship management. Subscribe by going to http://leadershiphooks.com/ and get the bonus report "61 Leadership Time Savers and Life Savers". Marcia is the author of the What Really Works Handbooks resources for managers on the front line and the Power-by-the-Hour programs fast, convenient, real life, affordable courses for leadership and staff development. She is available for media interviews, conference presentations and panel discussions on the hottest issues affecting the workplace today. Contact Marcia at 800-971-7619.
What happens when a Project Manager asks one of his... Read More
A few months ago I had the opportunity to spend... Read More
An individual's ability to forge effective relationships across cultures is... Read More
As a small business operator, personal checks may be one... Read More
In today's era of Professional and IT Services competition and... Read More
This article relates to the Safety and Working Environment competency... Read More
Everyone wants to succeed yet everyone has a different perception... Read More
I bet you can't tell me how leadership training and... Read More
One of the most common complaints that business owners have... Read More
One amazing, but sadly true, fact of today's advances in... Read More
If past behavior is the best way to determine future... Read More
Being a good trainer requires experience and skill. Experience comes... Read More
If I was a fly on the wall what would... Read More
When asked what part of their job they find a... Read More
Managing for Best PerformanceIn it's simplest form, performance management is... Read More
The most difficult part of creating a Security Policy for... Read More
I believe that whether corporations expense their stock options is... Read More
Picking people for a job is like going... Read More
Why is it imperative to have a company E-Mail Policy?... Read More
As your website grows in terms of attracting more footfalls,... Read More
Everyone involved in running a business from the smallest start-up... Read More
Using Employee Opinions Effectively When Designing HR ProgramsEmployee opinion is... Read More
There seems to be an assumption that change is a... Read More
At this time of tight budgets, the mantra of business... Read More
BUILDING TRUST AS A MANAGER: 1. Be reliable. Follow through... Read More
"Treat people as if they were what they ought to... Read More
1. No vision. Successful businesses have a clear vision or... Read More
In my book "You're In Charge?What Now?" I use a... Read More
I have been very fortunate to travel to several countries... Read More
I once was part of a group of management professors... Read More
Where does the time go? Billable time. As a consultant,... Read More
An allegation of harassment in the workplace is a growing... Read More
Maybe it's the season or just a more buoyant job... Read More
Introduction"High performing HR function affects bottom line nearly 10%"- A... Read More
Imagine that you're a sports coach and you need a... Read More
In the call center environment we are often only as... Read More
So I call my telephone company and someone picks up... Read More
A leader's role is to focus on those areas of... Read More
People in leading positions are often in a dilemma: on... Read More
If you search on Google for "virtual assistant", you'll find... Read More
Implementing an ISO 9001 system represents a major effort. However,... Read More
The heart of a fool is in his mouth, but... Read More
What do people really find challenging about leading meetings? Here... Read More
When trying to get something accomplished, assertive behavior is the... Read More
Tommy Sherman daily monitors a helpdesk-provisioning queue for a large... Read More
Left alone it doesn't take long for a building with... Read More
I am not writing this to create a list of... Read More
It used to be that only the largest multi-nationals needed... Read More
Fast Relief for Sarbanes Oxley Section 404 ComplianceSection 404 of... Read More
A maverick is an independent person who will not go... Read More
Some time ago we had the privilege of working with... Read More
What is the no. 1 asset in your business beside... Read More
It happens over and over in businesses every day.Within large... Read More
An operations manual can act as a tool for training... Read More
Late last year I was presenting a workshop for the... Read More
E-mail, voicemail, "got a minute?" interruptions, multiple projects... Read More
The knee-jerk response to prioritizing requirements is to mark everything... Read More
Most people think real change in an organization occurs as... Read More
Leadership is only sustainable when leaders consistently come up with... Read More
When you first take over a department, expectations are usually... Read More
In many ways there are no secrets to implementing effective... Read More
Nobody's perfect, including the boss. Managers, we polled recently, acknowledged... Read More
Recently, I felt appalled to see a political candidate running... Read More
This article begins with a tip of the hat to... Read More
This article relates to the Compensation and Benefits competency, commonly... Read More
1. Create benefit intensifiers for your list of ad copy... Read More
Business Management |