Money, Love, and Turnover
Most managers don’t fret too much about losing minimum wage talent. But they should. And they should worry when anyone leaves because it costs them a lot.
The next time one of your minimum wage employees takes another job that pays 25 cents more per hour, remember it will cost $3500 to replace him. $3500. Go ahead and write that on your white board. That’s $3500.00. Maybe more. If you don’t train the replacement (I know… you don’t have the money or the time to train, right?), it will cost even more: without training he will make mistakes that you could have prevented and it will take him longer to reach full productivity. Just imagine what it costs to replace a data entry specialist, a supervisor, or a database administrator. A big part of figuring out how to achieve better financial results is finding ways to retain the investment we make in people when we hire them. Making an effort to keep people in their jobs is worth it.
A couple of November posts reminded me it can be challenge for an employee to stay with a job.
A job, Lucy Kellaway reminded me, is sort of like a marriage. Of course, both are pretty serious commitments. But you get paid to stay on the job… yet there are fewer staff meetings in a marriage…hmmmm.
Well, anyway, one of the keys to a lasting marriage is making a good choice in the first place. You can get lots of how-to advice on that. But surprisingly little advice is available about how to figure out whether a job is the “right” one for you. If a job turns out to be “wrong”, you are likely to leave.
Want to know more about what makes people fall out of job love and leave? Kazim Ladimeji reminded me of a PricewaterhouseCoopers report published a few years ago. http://www.recruiter.com/i/top-4-reasons-employees-quit/ The report listed the top reasons people gave for leaving PwC during their exit interviews. The PwC results match those in a similar Gallup study.
One of the big reasons people leave an employer is that supervisors did not respect or support them in their work. Wait – isn’t that the job of a supervisor – helping people do a better job? Having the right managers in place leads to business success because the right managers know how to “multiply” their talent through their teams. That means promoting people who will be good managers, not just ones who perform well in their current job.
Employees need managers who are good at teaching them more the job so they are increasingly successful over time. As an example, take college basketball. Count the number of head coaches who were star players and you get the picture. One coach warns against hiring retiring NBA stars as assistant coaches. Why? He says they are lazy – they are so used to being catered to they don’t know how to cater to someone else. It isn’t enough to make yourself a great player, as a coach (or manager) you have to know how to make someone else a great player – and you have to recruit and do the paperwork, too!
Another big reason people gave for leaving a job was that it was boring and not challenging. But what may be boring to one employee can be exciting and satisfying to another. The key here is that jobs and people should be accurately matched – that is a job for science since the factors most important to job success are not observable – you won’t find them on a resume or figure them out from a job interview. When people and jobs are successfully matched, we know that they have higher productivity and extended longevity.
Our client Brian Vogel likes to talk about how he is hiring employees who have greater “stickiness” – that is, they stay in his company longer so costs go down and organizational knowledge goes up. Sticky employees help their employers realize a higher ROI on the initial investment made in the new hire. With costs of about $3500 to replace a minimum wage employee, turnover is an expense worth managing.