Preventing Costly Turnover, Part 1
Most contractors do not realize the horrendous cost of turnover. I hope these next two articles will show you what it costs when you lose a good employee, and also how little it costs for you to keep him or her.
In today’s critical labor market, some contractors estimate the cost of losing an employee to be between $50,000 and $100,000, depending on the employee’s role in the company.
I have personally worked with hundreds of key employees of all trades who left other companies to find the position they were diligently performing. You can only imagine how much growth and profit potential those former employers lost with that turnover.
Let’s take a quick look at some of those losses:
1. When many good employees leave a company, they also take other good employees with them.
2. They damage your recruiting power. They spread the negative reasons why they left your company to all of their relatives, friends and acquaintances.
3. They will steal your valued customers who enjoyed their personal performance on previous projects.
4. You lose their coaching and team-building potential.
5. They become a viable part of your competition when they stay in your market area.
6. You lose their decision-making and value-engineering abilities.
When we look at the causes of turnover, there are definitely some that are not preventable:
Preventable CausesWhen I approach a company as a consultant, my diagnosis is similar to a doctor checking your pulse and temperature to see if something is wrong. I look at your years of business compared to years of seniority of key employees. If this is not on a positive track, I look for these specific causes and cures:
Cause A: Your employee goes to another company to advance since your top positions are filled with senior employees, relatives and people you hired at the top.
Cure 1. Promote from within. Every new position should be posted with a note in everybody’s paycheck. This does not give them the job, but gives them a chance for that job.
Cure 2. Maintain second-string training for every critical position.
Cure 3. Never hire at the top!
Cause B: The biggest turnover in our industry is with employees who just didn’t fit in your company. You can just imagine what reasons they gave to all of their family and friends.
Cure 1. Be sure your interviewer asks the right questions before hiring and does not make promises that you cannot keep.
Cure 2. Use an orientation checklist to assure your new employee learns all of the rules and company policies, as well as your management’s chain of command.
Cure 3. Provide a 90-day mentor to assure your new employee is treated as an intern rather than a green helper.
Cure 4. Utilize your database skills inventory to measure how fast and how much your new employees are learning. Mentors should monitor this training and make adjustments when needed.
Cure 5. Monitor employees’ performance with daily 6-8-10 ratings and monthly wage reviews. You can also utilize piecework to pay a bragging wage to your newly hired top performers.
Cure 6. Use an exit interview to determine what went wrong and who was at fault. Always invite a good employee to come back if his or her next job does not work out.
Cause C: Many good employees leave a company because they were promised something that did not happen.
Were you so busy that you forgot what you promised? Do you think your employees forgot? Do you think that their spouses forgot? Do you realize that a broken promise is a lie, and no proud individual wants to work for a liar.
Cure 1. Make absolutely no promises that you cannot keep. If circumstances prevent you from keeping your promise, you must go to that employee and apologize with your reasons.
Cure 2. Always make a notation of what you promised and keep it in that employee’s file so that you cannot forget.
Cause D: You damage your employees’ pride. No contractor wants employees who are not proud of themselves and their performance. Construction is a tough and rugged occupation and we try to uphold that image. Imagine a plumber telling his friends at a bar, “They hurt my feelings.” This invaluable pride is very sensitive and can be damaged or destroyed by any of the following common mistakes.
Cure 1. Write and post your chain of command to assure every employee who is the correct person to tell him or her what to do or supply criticism for not doing it properly. Ensure that you and your entire management team respect employees’ pride by complimenting publicly and criticizing privately. Remember Paul Ridilla’s motto: “Add pride to his life, his work will show it!”
Cure 2. Although our military has separate officers’ quarters and enlisted men facilities so that they do not socialize, I highly recommend your management team become “off-the-job” buddies with their work force. They can go hunting and fishing, watch sporting events, go to social gatherings, help each other with home repairs, etc.
Just remember the No. 1 rule that you must not break - do not talk shop! If the subject of work comes up, your supervisor needs to change the subject or remind the employee that you don’t talk shop away from the job. If the supervisor does respond with any negative comment, they will be quoted or misquoted for saying it. It’s easy to imagine the negative impact when that “comment” reaches the victim.
Cure 3. Negotiate your written company rules and policies with each individual employee and have him or her sign your copy. You can never say to an employee, “You should have known better,” if he doesn’t know the company rules and policies.
Cure 4. Always wear a smile and speak to each employee. Do you know how they would feel if you simply walked on by and did not even acknowledge their presence?
I hope you are already using exit interviews to apologize to a departing employee and determine what went wrong and who may have caused it. You should review these records to prevent re-occurence.
Next month we will continue with more of these preventable turnover causes and cures.