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As an Operations Manager, I was trained that turnover meant someone did not do their job properly for one of several reasons.  For the most part, employees do want to work.  But, ... they need training, supervision, correction, encouragement and treated like a human being so they can work effectively and appropriately.  Again, for the most part.

Therefore, if there is turnover, someone did not do their job.  Either the hiring manager and/or supervisor did not have the proper job description for the position, the proper standard of performance for the position, the proper interviewing and screening of the applicant, the proper training of the new employee, the proper follow up and supervision and correction or re-training of the employee ... or ... the applicant lied somewhere in the process, did not do their job in attempting to learn the position as they should have, did not put their all into the position as was expected, did not have the correct perspective on themselves up front for what they were looking for in the particular job in question. 

In other words, turnover is because either the manager / supervisor or the employee failed in their job.  One or the other.  Maybe a combination.  Most of the time, it is usually the manager / supervisor.

Having said that, there is one more valid reason for turnover.  The employee grew in the position beyond what the position entailed and merited being elevated in position to the next higher level, whether with the same company or another company.  That should be mutually understood and agreed between the company and the employee as a natural progression of talents.

That is the way I was trained to think.  I still do.  Hence, it was my job to consider each position seriously and each person that filled that position seriously as if they were a family member.  A family member of the company I belonged to and they should be treated as such.  AND, then, to take care of all family members as they need to be taken care of.

I reduced the turnover rate down from every 30 to 45 days when I took over that Operations Manager's position to well over a year with minimum wage employees, including supervisors and managers my first year in that position.

It is all in the attitude.  The attitude of the manager or supervisor.  Not the employee.  Who is the leader?  Who is in charge?  It should be government from the top down.  Any other way, won't work.  Therefore, the leader is the one that carries the responsibility of everything that happens in their department.  Including turnover.

Turnover usually indicates there is a manager problem.  Not an employee problem.  And turnover is costing the company big time.

Employee Turn Over - do YOU know how much it costs the company for employee turnover?

Quick question - Have you calculated how much it costs to hire and train a new employee?  What is that figure?  Do you know?

Each department may be different so this should be calculated per department and even each position in a department throughout the organization.  

Have you ever done this calculation?  You really should.  Generally, it is more than most managers and employees think.  

When you add in the costs of mistakes due to inexperience, it really mounts up.  Also add in the costs of lost upgrades of business and lost additional sales for not knowing how to SEE them, never mind capture them.  

When one looks at the big picture, the costs of turnover can be staggering.  And there are reasons for that.  Do YOU know all the factors involved?

Do you then know what the figure is for your industry or for the position in question so you can compare your turnover with the industry?  From experience, I suggest your turnover rate is too high AND I believe it can be reduced.

These high ratios should shout out there is a problem that needs to be addressed and corrected.  And fast.

What To Consider

But, the first step in correcting the problem, is seeing that turnover is a problem in the first place.  Any turnover.  

To me, when there is turnover, any turnover, someone failed somewhere along the way.  Either in the hiring and the hiring process, the training, or the follow up, the constant up grading and tweaking or the human relations interaction with the person doing the work.  There may be other factors as well in this simple expose.  The person hired may be part of the problem in the turnover equation as well carrying lots of baggage with them.

I suggest, why not think and consider that ... IF ... the right people were hired right to begin with from both sides of the perspective, trained appropriately for that position and person, taken care of throughout the time they are with you, then why would they leave?  Simple question yet, requires a profound answer, wouldn't you agree?

The analogy comes to mind that when a child is used to train infants, then the trained infants will never have learned a higher level than the child who did the training.  In this case the emphasis is on a child.  The infant would not learn high school or college or graduate school material.  Just won't happen.  They will learn only to the level of the teacher and if a child, then a child's level. 

Which means it is important to consider who does the training.  What is their, the trainer's, level of expertise, their level of maturity, their level of thinking capacity, of problem solving, of building in flexibility and of self motivation, of vision?  

Vision is extremely important, actually - key, for the bigger picture.  As the Good Book says, without vision, people perish.  They won't last.

How To Find The Cost Of Training

Simple formula - add up the various costs associated with training.  Simple, yet, complex.

First, consider the whole hiring routine.  What does it cost to hire someone?  The out of pocket initial costs as well as the in-direct costs.  

In other words, add in not only the cost of placing various ads or search announcements in various media, but also the costs of all the individuals' time involved in the whole hiring process AND the lost time they would normally spend doing other activities.  This is huge or should be huge.

Next, consider the interviewing process - before, during and after.  Who is involved with responding to potential applicants and that whole process?  Again, take into consideration the direct and indirect costs of time, costs of application materials, physical space, preparing for the initial application process AND the overall image - good or bad - of the company requiring a position to be filled at each stage of the hiring process.

Then, consider the interviewing process itself.  Who is involved and how?; how will the interviewing process take place?; how much time will be needed before, during or after the actual interview?; consider the various materials needed and the various laws in regard to the whole hiring process; the physical space required for the interview; the image of the company in the interview process; and remember the time away from other activities' value.  Then add in time to get the mental mind back in focus to the other activities that need to be dealt with after the interviewing process.

More Than Initially Meets The Mind

This all this so far, is before the first interaction of the interview has begun to be taken place.  Never mind having taken place.  Does it boggle the mind how much your turnover really costs YOU or YOUR company?

Add in the various costs of the actual interview, again, direct and indirect.  Are there any tests to take place that may also may need to be evaluated and reviewed?  What about the various verifications that may need to be done, especially in this day and age of lying, half-truths and outright deceptions galore?

Then, consider the evaluation process and the actual offer making and negotiating.

Again, this is all before a new person is hired and begins.

Once someone is hired and begins, consider the costs associated with the initial paperwork trail to cover all federal, state, local authorities' demands.  Oh, yah, don't forget your own needs to cover YOUR bases should something go wrong later on and the attorneys need to enter the picture.

Once all that has been done, consider the actual training.  How long will it take - a week?  two weeks?  30 days?  3 months?  6 months?  2 or more years?  

I contend, most training takes at least 30 days ONCE HIRED AND BEGUN just to be knowledgeable enough to do certain entry-level positions.  Usually, a lot more before most of the mistakes have been eliminated and they start to really get into their position.  For managers, it usually takes 6 months to a full year and higher amounts the higher up the ladder one goes.

What are those costs?  Do you know?  Not only the out of pocket salary or wages, but calculate all of the various benefits and perks associated with them and the new employee.  Add in the cost of mistakes they make and a facture for lost upgraded business and lost business they cost the company.  Keep adding in the negative reputation they cost the company for their lack of experience with the company that is extra from mistakes, from lack of upgrades, from lack of extra business.  This really may be huge in and by itself.

Now, what does it cost for the training itself and how will that be done and by whom or multiple whoms?  Remember, out of pocket materials expenses as well as all the labor involved, the physical space and equipment that could be used for something else or not needed at all and a myriad of other incidentals associated with the training process.

Now, add in something no one wants to think about.  The fact most employees will leave the company at some point.  What are those costs?  These are part of the entire hiring process costs - again, direct and indirect costs.

What does it cost to terminate someone?  Is it different whether voluntary or involuntary and who does the termination - company or individual?  

This assumes you can start training the new person quickly.  What happens when the "new person" isn't hired as quickly as you'd like?  What if that vacancy position lingers awhile longer than you anticipated?  What could be the additional costs for doing that?  Direct as well as indirect?

Do YOU See The Costs Yet?

You have begun to get the picture to calculate the TOTAL costs to determine the total DRAIN to the bottom profit line of the company.

Total up all the above costs and what is that figure?  That is YOUR cost of training a new person.

Ratios

Now consider what it would cost to train the trainer to be raised from a child, as mentioned above, to a high school or college or post-grad type level.  And, how long would it take to train them?  Let's say, it may take $2000 out of pocket expenses plus wages, benefits and other perks just to get someone to the knowledgeable profitable-to-the-company level to begin training a new person.

Now, take all those costs of the trainer and divide that by the Total Hiring, Selecting, Training cost of a new person.  What is that ratio?

Compare the two.  What do you see?  Don't you see the cost of what NOT training the trainer costs the company?  This comes directly off the bottom line, doesn't it?

Bottom Line

Notice, that employee turnover is expensive AND needless.  It doesn't have to be.  That IS, I contend, a dramatic sign something is wrong.  Something major.  Someone doesn't know something.  They just don't know what they don't know and therefore make very common mistakes not knowing what they were never taught for whatever reason.  

They need what AGS Life Academy teaches - the first step in learning is to learn they need to learn.  Actually, learning is an on-going item throughout life.  Employee turnover teaches blatantly or should, someone needs urgent training.

That someone needing urgent training is NOT the new employee.  

Actually, it could be several individuals.  It starts at the top of the organization.  The owner of the company to allow employee turnover to exist in the first place needs to be taught things.  Those leading up to the hiring interviewer who does the screening needs to be taught some things.  The manager that says hire this person needs to be taught things.  The training person that does the training needs to be taught things.   Those who follow up after someone is hired, trained and monitored and several more possibly in the process all need additional training.

Then, one really should ask the question, "How fast can we ALL get those at the top levels of the organization trained to look at employee turnover differently?"  Then, how fast can we get ALL the others under that "leader" trained?  A different mindset is needed throughout the organization.  It is called constant training & re-training.

Or, as the former owner of a company told me within 30 days of making me Operations Manager, "Gary, you WILL take the Dale Carnegie 12 to 14 week Human Relations course or you're fired."  That was blunt.  It worked though.

I became a deeper life-long student of learning in the process.  This Academy is the result decades later of that and other encouragements.  With a simple purpose - to teach others some of what I've learned.  The Street Smarts of decades.  What works and the difference with what does not.  AND, to discern that difference for the self.

We found at that former company, that the initial expensive investment for the course was paid for in the first week.  The very first week.  (I've seen this happen numerous times since for other people in other organizations as well.)  Everything after that first week was extra profits.  Huge profits.  

That course, I believe, helped lead my former company to doubling the size of the company, not once, but twice in two years.  One program did it.  It turned my life around substantially.

What can training the leadership and the trainer do for YOUR company?  I contend that you have a choice - either pay slowly and continuously the larger amount ... or ... pay a bunch and a known amount up front and reap the benefits quickly over time.