Is TURNOVER putting your business at risk?

Turnover in any business is inevitable.  The average company turns over its’ entire workforce every five years.  In many cases the turnover is an “up-grade” but even in those cases there is an associated cost.  To determine the cost of turnover consider the following:

Lost productivity during the time the position is open;

Recruiting out-of-pocket cost;

Cost of your time in recruiting and training a replacement;

Learning curve of the new employee;

Risk of a bad hire; and

The loss of institutional knowledge.

As discussed in Organizational Structure posts, there are three types of employees—climbers, campers and quitters.  Turnover of quitters is generally a positive as the replacement can’t really be worse!  Turnover of campers and climbers is a risk.

Campers are persons who don’t tie their self-worth from their work, rather they get that from outside work—church, children, volunteering, etc.  They are there for the paycheck.  Not that they don’t do a good job—generally they do, but they don’t do the “extra” that would make them much more valuable.  You need a large base of Campers in order to process the volume of work you need to process and therefore they are valuable but they are not the real profit drivers of the company.  One asset that they do possess is institutional knowledge.  The long-term camper-employee knows how things are done.  They know your customers.  They might not be the best bartender but they know what Joe Customer drinks; know his name; and Joe likes him. They know where things are kept and how to fix things.  Techniques for retaining Campers can have a strong impact upon your results.

Climbers are persons derive their self-worth from their work.  They like to do things well and they produce a disproportionally high percentage of your profit.  Few organizations have more than 15-20% of their workforce that they can classify as a Climber and as they are so valuable turnover in this class of employee can have an extremely negative impact upon your company.  Techniques of retaining Climbers are essential.

More employees are driven away than leave on their own.  Start by not driving your employees away!  What drives away Campers?  HR errors, paycheck errors, failure to implement vacation and personal leave; and to a smaller degree—low pay.  Oddly enough the less a person is paid, the less important money is to them.  Recognition in front of the group is a significant benefit to a Camper.

What drives away Climbers?  Lack of a ladder.  The Climber needs to believe that there is “somewhere to go” within the organization which is why growth is so important.  Growth creates more internal opportunities; lack of growth does not.

There are other retention “devices.”  Benefits such as health and other insurances, retirement can attract more desirable employees and also creates a “barrier to exit” that many Campers and even Climbers cannot overcome.  Pride in the company through internal recognition also reduces turnover as do properly structured incentive programs.

Success Partners at The Fremont Group can help you address these issues by bringing to the table both their personal experience and the experience of other companies and designing programs to address this risk and make you more money.  Give us a call!  303 338 9300

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