What Are You “Turning Over” When You Say You Have “High Turnover?”

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

It is not hard to overhear human resource managers commiserating over the high rate of “employee turnover“ they are encountering and struggling to remedy. In listening a little more closely, it is not entirely clear as to what that phrase, seemingly ubiquitous, means today. Is this a conversation where both parties seem to believe they know what the other is talking about, but underlying each case are different facts?

Not too long ago, turnover meant the rate of loss of employees to replace those who exited the company. It usually referred to those employees in which the employer had made an investment to develop them into an asset. it appears many still see that as a general description, but the source of their struggles seems to address other structural issues.

Is important to distinguish between four different types of labor turnover to be accurate. First, there are the individuals that apply for a job, are hired, but do not appear the first day of work. The only investment the company made is the time it took to interview the individual and log them in as an employee.

The second type of turnover concerns the individuals that have gone through the interview process, showed-up for work, stayed for a few weeks and then decided the job wasn’t for them for whatever reason. In this case, the company has more of an investment in developing the employee, but it is still rather insignificant.

The third type of turnover concerns employees that have been hired, who received a significant amount of training and pay while in training and have stayed for several months – almost reaching a recognizable level of productivity and return on the employer’s worker investment. Understandably, the employer has more of an investment in this type of employee and their loss is felt more.

The fourth type of turnover is more critical. The loss of employees that have been trained, have been with the company for the long-term, in whom the company has made a significant investment and their contribution to the operation is felt more deeply if they leave.

When employers are literally trying to find anyone with a heartbeat to interview and hire, and some even skip the interview process, it shouldn’t be any wonder that a large portion of those individuals may not show up the first day of work or stay around very long. There was no effort to screen-out undesirable candidates or screen-in candidates that could be trained into successful employees. The cost at type one and two turnover is insignificant and should not be the focus for employer’s frantic efforts to lower the turnover rate, even though it distracts from making sound, sustainable improvements.

The third and fourth types of turnover, however, have a significant cost and impact on the operation if the turnover rate is in a prolonged high state. It is a significant loss of an investment, and the cost to begin the process of training a replacement worker to that level is substantial. The opportunity cost, too, manifests itself as, for example, a subject matter expert with a high level of product output and quality is asked to operate at a much lower level while training a replacement (usually in an unstructured, haphazard way under pressure to “return to work”). Two people being paid for a combined low level of productivity – multiply this number by the number of replacements and the cost can be a serious threat. It can also manifest itself as the loss of operational wisdom and expertise that was never measured but sure recognized after it is too late.

When employers are losing employees in the third and fourth categories of turnover, this should be taken very seriously. Questions should be asked, such as:

• “Are we providing a competitive wage and benefits package?“
• “Do we have clear opportunities for advancement and assistance in getting there?“
• “Do we provide additional incentives for new-hires, and incumbent workers who have been with the company for the long term, to stay around, such as credentialing opportunities, opportunities for promotion with training tracks that lead them there, and/or tuition reimbursement for courses of interest?”
• “Is our company culture inviting to new hires and sustaining as exhibited by the longevity of incumbent workers?”
• “Does our onboarding process adequately portray these reasons to stay?”

If several of these questions are addressed and the company provides a reason to stay for the longer-term, this will also affect the lowering of the turnover rates for the category one and two type turnover. If an employee walks into a company and sees no future, it shouldn’t be a surprise if they walk away in numbers. But if they see the people who have made it and have been with the company for many years are thriving, happy, and working together, that sets a more inviting tone for new hires who have no idea about the company they walked into.

After all, skilled long-term incumbent workers leave when they are dissatisfied because they have skills and are able to, which can be a serious loss of expertise for the employer who is left with an accumulating, less qualified workforce.

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.