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Home Best Practices Turnover can be good or bad. When we’re talking about inventory, turnover is very good. But when we’re talking about employees, turnover is bad. Very, very bad.

Turnover can be good or bad. When we’re talking about inventory, turnover is very good. But when we’re talking about employees, turnover is bad. Very, very bad.

Employee turnover is a serious matter. And it’s a very expensive matter.  It affects everything -profitability, productivity, customer service, quality control, and more.  Yet too many of us treat turnover as an unavoidable annoyance.  It’s true that some turnover is a good thing.  From time to time, we need to weed out the people who don’t belong and replace them with people who can bring in new thinking and fresh ideas.  It’s also true that very few people are going to stick with the same company for 30 years and hope to collect a gold watch.  So we tell ourselves, “People come and they go.  That’s just the way it is.  It’s just part of business.”  But is it really?  We can’t prevent all turnover, but isn’t it possible we might be able to slow it down a bit?  For some thoughts on how to do that, please continue reading below.

Turnover can be good or bad.  When we’re talking about inventory, turnover is very good.  But when we’re talking about employees, turnover is bad.  Very, very bad.

As a starting point, try dividing employee turnover into two categories: unpreventable turnover, and preventable turnover.  Unpreventable turnover happens when an employee leaves due to something that is out of our control.  Maybe it’s a job or salary offer that we simply can’t match.  Or maybe an employee and his or her family are moving out of the area for reasons unrelated to the company.  On the other hand, preventable turnover occurs when an employee leaves because he or she just doesn’t like working for us anymore.  These are people who want a different working experience than we provide, so they go looking for something else.  It’s this category we want to track to discover if there’s any discernable pattern to these voluntary defections.

We should be doing exit interviews . . . always.  And they should be done by someone who has strong interview skills.  The problem is, a departing employee may not want to burn bridges by getting into a contentious discussion.  So he or she may avoid talking about the real reason for leaving the company by offering up an innocent-sounding reason instead.  A skilled interviewer, in a non-threatening way, will dig for the real reason an employee is leaving.  In the case of a preventable departure, the interviewer will want to learn:

  • Did the departing employee feel comfortable discussing his or her job dissatisfaction with an immediate supervisor? If not, why not?  NOTE: Research shows that the overwhelming reason employees voluntarily leave their jobs is a poor relationship with their immediate supervisor.  As the saying goes, “People don’t leave their companies, they leave their managers.”
  • If such a discussion did take place, did the supervisor do anything to try to salvage the employee? If not, why not?
  • Was this particular departure an isolated case, or did it fit into a pattern of previous departures?

Again, we not talking about the unpreventable departures here, only the preventable ones.  The question we want to ask ourselves is, “If this employee quit for reasons we could have prevented or corrected, why didn’t we?”

Conducting exit interviews with everyone who leaves your company can be a difficult and time-consuming task, but if they help you make a dent in employee turnover, even a small dent, the payoff is well worth the effort.  Consider the benefits of a reduction in voluntary departures.

  1. Recruiting costs go down. Obviously, with more people staying on the job, we have fewer open jobs that need to be filled.
  2. Training costs go down because we have fewer new people who need to be trained.
  3. Productivity goes up because experienced (productive) employees are staying on the job longer. Productivity also gets a boost when experienced employees are not burdened with the task of “breaking in the new guy.”
  4. Safety improves. It stands to reason that experienced employees will make fewer of the “rookie mistakes” that can cause accidents and injuries.
  5. Our quality goes up. Experienced employees who know our quality standards and our quality control methods are likely to catch problems before they reach the customer.  That’s less likely to happen with a trainee.
  6. Customer service improves. Experienced employees know the level of customer service our customers expect, and they know how to deliver it.  New employees are still trying to  figured it out.
  7. Sales revenue goes up. A new member of your sales team, even one with previous experience, will take awhile to get up to speed in your sales environment.  While that’s happening, some sales opportunities will inevitably be missed.  But if we can keep the existing salesperson on the job, we won’t take that hit.
  8. Obviously, with all these benefits that accrue to a reduction in employee turnover, profitability goes up . . . in some cases, it goes up dramatically.

The message here is simple.  Don’t accept that employee turnover “is what it is.”  It’s not reasonable to think that you can eliminate turnover, but you should be looking for ways to reduce it.  Consider setting a target for turnover just as you set targets for revenue and expenses.  Even a small improvement can have a significant impact throughout your organization and ultimately, to your bottom line.  Salvaging good employees before they have one foot out the door requires an investment of time and effort, but the potential ROI is too great to ignore.

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