NACS recently reported that employee turnover for January 2012 was 58.9%, 64.7% for March, and 68.1% for June. If your strategy for reducing employee turnover for the past three-years was to simply rely on a recessionary economy, the expiration date on this strategy is about to expire. In many markets across the country the economy is showing signs of life, including more job opportunities.
When the economy turns the corner in your market, how many of your employees are out the door for a bigger and better job opportunity? I know many companies whose employee turnover is already over 100%. What do you think that number is going to balloon to when those employees have more job opportunities to choose from?
If you don’t have an employee retention strategy already in place, then shame on you because you knew this day was coming. You did know this day was coming, right? So what’s your plan?
Do the Math
As a benchmark, top quartile companies employee turnover is in the 56% range. How does your company compare? Let’s say your company operates 15 stores with an average of six-employees per store for a total of 90 employees. And let’s assume your current employee turnover is 75%. At 75% turnover you’re losing 68 employees (90 employees x 75% turnover rate).
At a modest employee turnover cost of let’s say $2,500 (realistically more like $5,000+ but $2,500 will make it more believable to the skeptics), employee turnover is costing your company $170,000 (68-employees x $2,500). If your in-store gross profit margin is say 25%, you have to increase inside sales by $680,000 ($170,000 cost of employee turnover / 25% gross profit margin) just to recover (break even) your cost of employee turnover.
So let me ask you: What’s easier to do – focus on reducing employee turnover or selling more Twinkies? And if you could sell more Twinkies, wouldn’t you already be doing it? Every company knows their employee turnover percentage, but very few have taken the time to calculate that percentage into dollars. You take dollars to the bank not percentages right?
Getting Serious About Employee Turnover
If now is not the time to implement employee retention strategies within your company, then when? Now is the time to task your HR and training departments to develop an employee retention strategy. Your retention strategy should focus in the areas of training, both onboarding and ongoing, business culture, reward and recognition programs, achievement celebrations, fun in the workplace, and teambuilding, just to name a few.
Consider putting together a work-team to develop your employee retention strategy. The work team should consist of six to eight people representing HR, training, store managers, supervisors and a few well respected and experienced CSRs. Provide the team with an objective, deliverables, and milestones.
Each team should have a team leader and facilitator. The team can meet once a week for a few hours and should report to a team Champion, say a director of operations or the owner of the company. The team Champion serves as a sounding board for the team’s ideas, provides direction and guidance (but not in a dictatorial manner), helps the team obtain necessary information, provides support and encouragement, ensures the team stays focused and not drifts off their objective, and secures the funding that may be required to implement their ideas.
One final comment – if you’re not already doing so, consider holding your store managers accountable for their employee turnover costs: not turnover percentage, turnover costs. We hold store managers accountable for cash shortages, why should a P&L category killer like employee turnover be any different? What you pay attention to and hold accountable gets results.
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