Eight North

Facts:

Of the 280 million workers who changed jobs since 1980, 40 million were the result of layoffs.  85% changed voluntary.

Labor is being re-deployed at an unprecedented scale and pace, straining the current system and threatening the corporation’s ability to execute its business strategy.  Every year the voluntary separation trend increases by 1.5%.

Reasons for voluntary separation, other than pay, are:

• Poor supervisory skills and attitudes
• No perceived career growth opportunity
• Inability to speak freely about one’s concerns
• The job itself
• No salary increases
• Work schedule changes
• Feeling devalued and unappreciated

The fact is that today’s employee isn’t less loyal, the definition of loyalty has changed!  The emergent workforce has different values and needs from the traditional employee. 

Traditional :  Their career is the organization’s responsibility; promotion comes with tenure;  they admire the organizational chart; they have a fear about changing jobs and seek security; and they feel training needs to provide job skills and product knowledge.

Emergent :  Their career is their own responsibility; promotion should be given based on merit;they ignore the organizational chart; they will change jobs for advancement; and training should take the form of coaching, mentoring and knowledge that will advance their careers.

IF YOUR COMPANY IS VIEWED AS TRADITIONAL, YOUR FUTURE SUCCESS IS AT RISK

Turnover: Consequences

Turnover costs.  The average turnover is roughly 16% (30% among high potentials, 20% key technical talent).  Non-exempt employees - the cost equals a minimum of 6 months pay and benefits.

Exempt employees - the cost equals a minimum of one year’s pay and benefits.

Lose 10 people = losing $1 million

Training and Development for Retention

A company’s biggest asset is its people, just look at the payroll.  If a company only invests 3% of its payroll for training and development, it will give it the edge over its competitors.

For example, Company X has 1000 employees. 

With implementing training and development, 12% will still leave within 12 months = 120

Without implementing training and development, 41% will leave within 12 months = 410

410 - 120 = 290 (turnover difference)

           290 x $50 000 = $14.5 million (based on average turnover cost calculated from the Saratoga   Institute data)

The argument for investing in employee training and development is clear.  Visionary organizations realize continuous investment in their people is a necessary business expense, and one that yields impressive returns.  Unfortunately, many more organizations look at this cost as something they cannot afford, especially in bad economic times.  And when the economy is good, they cannot afford the time, either. 

Calculate the cost of your company’s turnover, find out why people are leaving, and start developing your employees. 

 

                         

 

This entry was posted on Friday, July 18th, 2008 at 7:17 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.