| Employee Turnover: The Silent Killer |
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| Should you be focusing on "finding replacements" for those who leave you or hiring for "growth opportunities"? |
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| Employee Turnover is perhaps paid the least attention among
various employee issues. Even in the high turnover industries
such as Call Centres and Retail, it is shrugged off as inevitable. The
attitude is often "we have to live with it." Very few companies
take a proactive approach to reduce Employee Turnover. Various industry specific studies have shown that employee turnover has a huge impact on the businesses. It costs more than $75 billion to just replace the more than 6.5 million employees who leave four high turnover industries that include call centres and fast food industries companies every year. This was revealed in a study done by Nextera Enterprises, a management consulting firm. Better opportunities is usually cited as the reason of people leaving but often discontent within forces them to seek fresher pastures. Issues ranging from poor job fit, lack of recognition or support from senior management, uncertainty about the organization's future and poor management communication are some of the reasons why people start looking for other opportunities. Organizations that have a good track record of retaining their people are rewarded with not only lower recruitment costs but also improved organizational performance (operational and financial) and high employee morale. In today's scenario of widespread staff retrenchments, cost of doing business is receiving a lot of attention, and with employees' having a 'free agent' attitude, businesses need to go all out to retain their people and create an attractive workplace. A number of measures can be taken to retain employees and ensure employee loyalty. These depend on the nature of the industry and the culture of the organization. We work with our clients to study the root causes and come up with customised and workable solutions to address these causes and help bring down turn-over. |
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"The annual
cost of employee turnover in the supermarket industry exceeds the entire
industry's annual profit by more than 40 percent" estimates Blake
Frank, a professor in the Graduate School of Management at the University
of Dallas and author of a study commissioned by the by the Coca-Cola
Retailing Research Council. The research shows that employee turnover costs the typical supermarket $198,977 a year. That translates to $5.8 billion a year for the industry, says Frank. He calculates turnover as direct costs (advertising, training, interviewing, testing, new employee orientation) and "opportunity costs," which include "change-making errors, paperwork mistakes, damaging products, inventory shrinkage, and improper use of equipment." |
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