05 July, 2009

What Are Managers Pretending Not To Know About The Causes And Costs Of High Turnover?

It's getting harder for managers to pretend they don't know high turnover is preventable, that employee turnover has known causes, that turnover is costly and that high employee turnover inflicts brand damage that takes years to repair.

A widely cited study by Bennett J Tepper (Academy of Management Journal, Apr2000, Vol. 43 Issue 2, p178, 13p) says the most common reason employees quit their jobs is what he calls "abusive" or "bullying" supervision.

In addition to high turnover, abusive management can lead to labor union organization activity. In Karl Albrecht's Social Intelligence: The New Science of Success, Albrecht recounts a conversation with a well-known union organizer who said companies could prevent most union organizing activity if they simply fired all the abusive managers.

High turnover results in low productivity. One well-known retailer has such horrendous turnover that, at any given time, there may only be one employee in the store who actually knows how to ring up a customer. I have personal experience with this high turnover retailer. One day I tried to make a routine purchase but the trainees told me to come back in 20 minutes because the only person who knew how to run the register was at lunch. If you run a business in which it takes, say, a year for the typical new hire to reach job proficiency but the typical new hire only lasts a few weeks or a few months, how much is your turnover costing you in efficiency and productivity?

It's harder to quantify, but high turnover damages your brand. When half the people in town have worked for and left your company and when all the headhunters know they can easily poach your best people, it's obvious that your company is badly managed. Until you reduce the turnover your company will be an employer of last resort, not an "employer of choice." Just as happy employees make happy customers, happy employees also make recruitment easy because they encourage their friends to apply.

Whether your turnover is high because you're firing a lot of people or whether it's high because a lot of people are quitting, the resultant high turnover is a failure of management. The ability to identify, train and retain good people is, perhaps, the most important or all management functions.

What Companies Would Do If They Were Serious About Reducing Employee Turnover

Companies that are serious about retaining good employees will create a culture in which the success of new hires is in everybody's job description. If they give performance appraisals or annual reviews, employees will be rated on how much they help new hires to succeed and to "fit in" and be accepted.

Companies that are serious about reducing turnover will counsel, coach and eventually replace managers with high employee turnover. Such managers are damaging your company's brand, making recruitment more difficult, harming morale and costing your company money.

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