Employee turnover is a very expensive problem for employers. Many employers do not know what is normal, what the cost is or how to deal with it.
Do you have high employee turnover? Do you have less than 10 total turnover%?
Do you know what high turnover is costing you?
How do you calculate employee turnover?
Do you know how to reduce your employee turnover?
If you were the only business on a small island, you would not have turnover….we have a lot of mills in the same situation where they are remote. If you hire youngsters right out of school and and train them, they will stay there forever. You just need to train them and treat them well and you will have a great workforce. If you have a business near a city or other large businesses, you will always have issues with turnover unless you do everything right.
We can help you deal with employee turnover through hiring candidates that have a proven track record of reducing high turnover and or with getting outside help through such companies as Palmetto Leadership Center with help from Dave Baker.
Dave Baker, President of Palmetto Leadership Center, consistently works to educate his clients on the cost of turnover and what it’s worth to the business is to improve this incrementally. With more than a third (38.6%) of new employees quitting within the first year - 2019 Retention Report - Work Institute, you can’t afford to ignore the impact this has on your bottom line.
There are many studies attempting to place a dollar figure on the cost of turnover being anywhere from $15 - $50K, depending upon the type of position, so each organization must calculate their own costs considering factors such as:
- Employment costs including advertising, sourcing fees, screening, recruiting, and interviewing time
- Time to onboard a new employee
- Impact on the culture and ability to sustain or change it to meet strategic business objectives
- Productivity and the learning curve to reach maximum productivity
- Onlooker engagement witnessing turnover and begin second-guessing their own options
- Training cost to replace KSA’s and “how to get things done around here”
- Poor quality, service, business workplace safety and inefficiency
A strategic approach to optimize your workforce engagement is key to reducing turnover.
We can all agree that we’d like a highly productive workforce - people that are engaged and come to work with an “emotional commitment” or a high degree of discretionary effort.
As revealed in the chart below, we want our people on the trajectory of the dotted green line. And we desperately try to avoid the red line – people that are typically disengaged, doing the bare minimum. Research has identified four active forces that block us from achieving great results. These forces pull down your people on the “want to” curve and they inhibit the people on the “have to” line to step up.
The four forces are:
- Job Fit (and/or avoiding bad hires) is just one of them. It’s the most common. But job fit (or hiring concerns) is a symptom of something else - it’s a response to a business need (growth, re-org, attrition, poor management...etc). In other words, you can make the best hire you’ve ever made, but lose them because of poor management. Use a recruiter can help you locate the best people.
- Manager - the old adage that people don’t leave their job, they leave their manager is true. Bad managers stifle productivity, crush morale. Imagine hiring a great employee but losing them because of a manager!
- Team - good employees who don’t understand each other can wreak havoc, which also hurts engagement and productivity.
- Culture - (cultural misalignment) is another critical area that can block great results. Culture is defined by the leadership (for better or worse); understanding what’s driving the culture and why is vital to the strategy of the business and the results it seeks. For example, a start-up culture has very different requirements than a mature organization.
History has shown us that during high job rates, turn over increases where employees have better choices of employers. We are in the best job market in 50 years with unemployment down and the economy strong. We were at 44.3% total turnover in 2018 for all industries. According to the 2018 Bureau of Labor Statistics (BLS) and the long-term chart below 50% total separation rate (quits plus let go) has been normal. In fact, and 44.3% total separation rate (quits plus laid off/let go) in 2018 according to the BLS, is about as good as it has ever been since 1930 looking back all the way to 1910. The worst was at 150% in 1917. The wood products industry averages around 28%, much lower than the national average.
Where there are many jobs in an area, such a city where there may be many jobs such as software engineers, the employees have the ability to shop around for better employers and tend to have a high turnover where the demand is high. Of course software engineering jobs can be very high stress and so employees tend to move around a lot too.
Wood Products is a good industry to work in if you are looking for a secure industry compared to many others. Many employers anticipated the up turn of the economy and have worked hard to improve their relationship with employees by treating them better and awarding them higher wages and benefits to improve their bottom line.
Here are some more facts:
- BLS – Turnover (total separation) by Industry per Year 2014-2018: https://www.bls.gov/news.release/jolts.t16.htm
- Total Industry for 2018: 44.3%
- Durable Goods (wood industry): 2018: 28.9% (are you below this?). We have talked to companies with turnover in excess of 100% and some at less than 10%.
- Highest turnover Industry: Arts, Entertainment 2018: 87.4%
- Lowest turnover: Federal Government 2018: 14.7%
- Highest Location: South: 2018: 48%
- Lowest Location: Northeast 2018: 37%
- Turnover is highest for lower wage earners and so turn over can cost less, depending on how many people you lose. Turnover cost is higher for the upper wage earners where it is harder to find good replacements.
- Historical Turnover: https://eh.net/encyclopedia/history-of-labor-turnover-in-the-u-s/
- 2016 Turnover rates: https://www.compensationforce.com/2017/04/2016-turnover-rates-by-industry.html
- History of Labor Turnover since 1910 (see chart below) https://eh.net/encyclopedia/history-of-labor-turnover-in-the-u-s/
Let Palmetto Leadership Center and Top Wood Jobs help you reduce your turnover rates.
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