Guy Higgins on: Employee Turnover

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I watched the American and National Football Conference Championship games this year. After one game, the announcers observed that both the losing and winning teams would make some changes before next season. Every year NFL teams draft around a dozen players from outside the NFL and may pick up one or two free agents. The teams are prepared to deal with the new arrivals. Interestingly, some teams “hire” players cut from other teams and turn them into good or even excellent players.

As most of the Noble Readers know, I “grew up” in the Navy, working in units that experienced about a thirty-three percent annual “turnover.” Granted the new folks were Navy people arriving from their previous assignment, but in my squadron tours, about fifteen to twenty percent of our new people were arriving in their first, post-training tour. We were prepared to deal with training the new folks, and we performed well (at least I think we did).

Jack Welch, as CEO of GE, famously got rid of the bottom ten percent of his leaders every year. While I, personally, think that such an arbitrary approach is pretty dumb, GE did well under Jack. He also invested a great deal of corporate and personal effort in leadership development.

I recently read an article, How Much Does Employee Turnover Really Cost? I think that the article captures some good ideas, but I also think the author is missing some very important ideas. So, let’s look at both the good and the bad (as I see it).

The Hits:

  • Focus on the work environment – people don’t like to work in a hostile or depressing environment.
  • “People are our most important resource” – establish and follow policies and procedures that support that statement rather than create cynicism about it.
  • Recognize the impact that each person has – people want to know that they have performed well. Take the time to work with each person, recognizing their accomplishments and helping them work through areas they need to improve (note: outstanding performers develop their strengths and team to compensate for weaknesses – don’t be drawn in to trying to “fix” a person’s weaknesses).

The Misses:Worried Executive on steps

  • The author tacitly implies that every employee is worth keeping – that is patently not true. There have been truly outstanding NFL players who were cut from team after team because their “cost” to the team outweighed their value to the team. I once initiated an investigation of an employee – an investigation that led to prosecution and prison. Not all employees are worth keeping – but that also doesn’t mean you should fire the bottom ten percent every year.
  • The author is mute about the cost of promoting employees. If I promote an employee, I incur many of the same costs I would incur if I hired someone from outside the company. This does not mean I shouldn’t promote current employees, it just means I need to include those costs in the calculations.
  • The author makes some assertions about the actual dollar cost of hiring a new employee. He does not, however, provide any citation supporting those costs. Similarly, he had no supporting confirmation (citation of a paper or a study) for the benefits of keeping an employee. His supporting information was anecdotal.

I think that, in the Navy, we got the “hits”– and we took care of the “misses” too. We may not have gotten it all perfect, but people were our most important resource – and we had good ones.

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