Decreasing the Cost of Turnover WHILE Increasing Worker Capacity, Work Quality and Compliance…With One Approach!

by Stacey Lett, Director of Operations – Eastern U.S. – Proactive Technologies, Inc.

One of the blowbacks of persistently low compensation (i.e. hourly wage rate plus benefits and opportunity for advancement) is the corresponding high rates of employee turnover. The cost of turnover these days can be burdensome for any organization, and most encountering it express that they would like to minimize it.

In a previous article entitled “The High Cost of Employee Turnover” the causes, the costs and solutions were discussed. A handy way to estimate the cost of turnover to the organization was expressed. The Aspen Institute released a “Cost of Turnover” estimate tool of their own to assign a dollar figure to a firm’s level of turnover, to understand to what degree it is currently impacting operations and to explain to how turnover presents barriers to expansion or market adjustments.

Organizationally, things can be done to add window dressing that will attract candidates, but only a worker perceiving job stability and income sufficiency will stay away from actively seeking a better opportunity. Additional education and job-specific training opportunities may keep the worker from dwelling on the inadequate compensation for a while, but not adjusting compensation for the earned skills and value can fuel resentment.

One need only to revisit the Abraham Maslow’s Hierarchy of Needs of college lectures to understand the powerful influence income instability or insufficiency can have on an individual’s decision making. The Crash of 2008 drove most of the workforce to despair from higher tiers down to the fundamental first tier of Maslow’s pyramid. Jobs were lost, homes were lost, dignity and self-worth were stolen and to this day few have felt that they gained that back. Crawling back from one catastrophe they were hit by the economic impact of the Covid-19 pandemic. Needless to say, even though many in the labor pool seemingly recovered they remain in a fragile state.

In a sense, while Wall Street is continually pressuring publicly traded companies to cut costs to meet quarterly guidance, workers too are continually assessing their and their family’s status and seeking to better their position until physiological (food, water, sleep) and safety (health, job security, property) needs are secured. Until these levels are achieved it is hard for an employer to encourage teamwork, loyalty and ambition.

In a American Health Association paper entitled, “The Epidemic of Despair Among White Americans: Trends in the Leading Causes of Premature Death, 1999–2015,” the authors concluded, “The unfavorable recent trends in premature death rate among non-Hispanic Whites outside large urban areas were primarily caused by self-destructive health behaviors likely related to underlying social and economic factors in these communities.” Rising household debt, rising credit card debt, rising student loan debt threaten security if the increasing costs of living alone don’t drain worker’s hope and self-confidence. Fewer options to work toward relieving oneself and the family of these burdens is a recipe for economic and societal failure.

The next generations that grew up in the aftermath of 2008 only know what it feels like to live in an income-insecure life. So when employers say they are looking for “skilled talent” but are only willing to pay at rates of a fast-food worker and offer benefits that drain the worker’s meager income, they may start the job quietly resentful and unwilling to unpack for a long-haul. A low-compensation position with little or no opportunity for advancement sets a path in motion that will be hard to redirect. A low-wage job under a “tyrannical” management style can accelerate the separation.

A lot of it has to do with a worker expecting to be respected, with gestures made by the employer feeding such an expectation. Seldom is respect returned when someone feels contempt or ambivalence is given.

In a comparing some key manufacturing occupations from 1980 – 2019, it is easy to see how someone who could once sustain a family in modest, but dignified, comfort would feel such despair and those collaterally impacted might feel suspicious and unlikely to show loyalty to the employer.

No matter how much industry tries to spin the reasons for this compensation, there is little affect on a worker feeling the realities of their needs. An employer that celebrates profits to their shareholders while expressing sadness that they have to cut wages or cancel pay raises doesn’t earn respect from the worker or their family.

At some point, each employer will have to decide how they are going to address these prominent contributors to worker turnover. When the first employers start paying wages that workers feel are acceptable, others will follow if for no other reason that competitive behavior. Maybe it will mean a slight decrease in corporate profits, but what is the value of long-term stability and growth?

In the meantime, having Proactive Technologies Inc. set-up and managed their structured on-the-job training program for the accelerated transfer of expertise™ – designed for your job, your work and your organization – will keep the employee engaged and moving on a path of full job mastery while your organization considers how it will reward this demonstrated initiative and capacity development . It is up to your organization to give serious consideration to the value of efficient and proficient labor, and the costs of turnover.

If you recognize these challenges and have shed your fear of even looking at other solutions, check out Proactive Technologies’ structured on-the-job training system approach to see how it might work at your firm, your family of facilities or your region. Contact a Proactive Technologies representative today to schedule a GoToMeeting videoconference briefing to your computer. This can be followed up with an onsite presentation for you and your colleagues. A 13-minute promo briefing is available at the Proactive Technologies website and provides an overview to get you started and to help you explain it to your staff. As always, onsite presentations are available, as well.