The impact of turnover is a big $


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Read this white paper for a step by step calculation of turnover cost, the top 10 employee complaints that could lead to turnover, plus solutions for diminishing this costly phenomenon at your organization.

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The impact of turnover is a big $

  1. 1.     A  White  Paper     TTThhheee      IIImmmpppaaacccttt      ooofff      TTTuuurrrnnnooovvveeerrr      iiisss      aaa      BBBIIIGGG      $$$         HHHooowww      MMMuuuccchhh      MMMooonnneeeyyy      dddooo      yyyooouuu      TTThhhiiinnnkkk      yyyooouuu      LLLooossseee             EEEvvveeerrryyy      TTTiiimmmeee      SSSooommmeeeooonnneee      LLLeeeaaavvveeesss      yyyooouuurrr      CCCooommmpppaaannnyyy???             It  is  a  BIG  NUMBER,  and  beyond  financial  it  is  damaging  to  employee  morale.   What  can  you  do  to  increase  your  confidence  and  mitigate  the  damage?         YYYooouuu      cccooouuulllddd      PPPRRREEEVVVEEENNNTTT      gggeeettttttiiinnnggg      ttthhheee      wwwrrrooonnnggg      pppeeeooopppllleee...                         Read  on  to  learn  about  turnover:  how  to  measure  it,  manage  it,     and  how  to  diminish  it  before  it  happens.      REALLY.  
  2. 2.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             2             EEEmmmpppllloooyyyeeeeee      TTTuuurrrnnnooovvveeerrr:    What  is  it,  its  costs,  and  how  you  might  manage  it?   by  Pamela  Stambaugh,  MBA  and  Ryoji  Nakamichi       “The  ability  to  make  good  decisions  regarding  people  represents  one   of  the  last  reliable  sources  of  competitive  advantage  since  very  few   organizations  are  very  good  at  it.”  —Dr.  Peter  Drucker     UUUnnndddeeerrrssstttaaannndddiiinnnggg      TTTuuurrrnnnooovvveeerrr      aaasss      aaa      CCCooonnnccceeepppttt         What  is  Turnover?   When  employees  leave  a  company  and  have  to  be  replaced,  that's  called  turnover.  A  certain  amount  of  turnover  is   unavoidable,  but  too  much  can  ruin  a  company.  Some  employees  will  always  retire,  move  away,  go  back  to  school,   or  leave  the  workforce.  This  level  of  turnover  is  not  only  unavoidable,  it  can  be  beneficial.  It  brings  new  people  into   the  organization  with  new  ideas  and  a  fresh  perspective.       Three  Types  of  Turnover   Organizations  generally  accept  that  turnover  is  broken  into  three  types:  overall,  voluntary  and  involuntary.  Overall   turnover  is  composed  of  voluntary  and  involuntary  turnover  that  reflects  the  total  number  of  turnovers  during  a   determined  period.  Voluntary  turnover  is  initiated  by  the  employee  who  desires  to  terminate  employment.  An   employee  might  leave  the  job  due  to  not  fitting  in  with  the  established  corporate  culture  or  receiving  a  much  better   offer  for  a  position  from  another  company.  In  contrast,  involuntary  turnover  is  caused  by  dismissal  from  the   company  due  to  perhaps  underperformance  or  a  business  slow  down.     HHHooowww      BBBiiiggg      aaa      PPPrrrooobbbllleeemmm      iiisss      TTTuuurrrnnnooovvveeerrr???         Trends  for  all  industries  average  turnover  rate  from  2009  through  2011   Table  1  provides  trend  data  from  the  Executive  Brief:  Tracking  Trends  in  Employee  Turnover.  The  data  reflects  that   average  annual  turnover  rate,  average  voluntary  and  involuntary  turnover  rates  from  2009  to  2010  increased,  then   decreased  from  2010  to  2011.  These  variations  correlate  with  national  unemployment  during  the  same  period.       According  to  IBISWorld  Survey  June  2013  (Table  2),  the  national  unemployment  rate  was  9.3%  in  2009.  In  2010,  it   was  9.6%,  an  increase  of  0.3%  from  the  previous  year.  However,  the  national  unemployment  rate  decreased  from   9.6%  to  9.1%  in  2011.                                Table  1.  All-­‐industry  Average  Turnover  Rates  for  2009-­‐2011  by  type                         Year   Average  Annual   Turnover   Average  Voluntary   Turnover   Average  Involuntary   Turnover   2009   14%   8%   7%   2010   15%   13%   9%   2011   13%   9%   6%   Source:  SHRM  Human  Capital  Benchmarking  Database  (2010-­‐2011,  2011-­‐2012,  and  2012-­‐2013)      
  3. 3.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             3     Table  2.  National  Unemployment  Rate  for  2009-­‐2011  by  type   Year   National  Unemployment  Rate   Change  Rate  of  Previous  Year   2009   9.30%   3.50%   2010   9.60%   0.30%   2011   9.10%   -­‐0.50%   Source:  IBISWorld  Business  Environment  Profile  June  2013:  National  Unemployment  Rate     Turnover  Rates  within  Specific  Industries   Table  1,  the  data  from  the  Executive  Brief:  Differences  in  Employee  Turnover  Across  Key  Industries  suggests  which   key  industries  have  high/low  turnover  rate,  revenue  per  FTE  (full-­‐time  equivalent),  and  cost-­‐per-­‐hire.  The  highest   turnover  rates  were  service  industries  such  as  accommodation,  food,  and  drinking  places  (35%)  and  the  lowest   turnover  rates  were  associations  such  as  professional  and  trade  associations  and  utilities  (8%).  The  average   turnover  rate  was  15%  in  all  industries  in  2010.  The  revenue  per  FTE  is  a  measure  of  employee  productivity.  This   ratio  provides  information  on  a  company’s  efficiency  during  a  determined  period.  The  industries  with  high  revenue   per  FTE  indicate  much  better  productivity  than  other  industries  with  low  revenue  per  FTE.  The  cost-­‐per-­‐hire  is   usually  high  in  high-­‐tech  industry  in  order  to  recruit  skilled  staff  and  train  them  compared  with  service  industries.  As   a  result,  the  cost-­‐per-­‐hire  for  industries  such  as  high-­‐tech  ($3,357),  association  ($5,582),  and  utilities  ($3,936)  was   higher  than  the  service  industry  ($1,062).                       The  Relationship  between  Turnover  and  Job  Satisfaction     Job  satisfaction  is  frequently  —  but  not  always  —  relevant  to  voluntary  turnover  rates.  Employees  who  are  satisfied   with  their  jobs  tend  to  stay.  On  the  other  hand,  those  who  are  dissatisfied  with  their  jobs  often  seek  new  jobs.   Figure  1  reveals  trend  data  from  the  Executive  Brief:    Tracking  Trends  in  Employee  Turnover.  The  data  suggests  that   job  satisfaction  rates  tended  to  elevate  over  past  years  until  2009;  however,  job  satisfaction  has  begun  to  slowly   decline  from  2009  to  2012.         One  of  our  reviewers  pointed  out  that  in  the  mortgage  business,  turnover  has  more  to  do  with  the  ups  and  downs   of  the  market  than  employee  satisfaction  and  that  was  certainly  true  in  2007  and  2008.  “nIn  2008  after  the   subprime  crash,  Orange  County  lost  between  50,000  and  60,000  mortgage  jobs.”    He  gave  another  more  recent   example  of  the  mortgage  industry  being  hot  until  a  month  ago  when  rates  spiked  and  application  volume  was  off  by   50%  -­‐  60%.    “If  that  continues,  that  business  will  cut  in  half  within  about  four  months.”    John  further  pointed  out,   “In  a  downturn,  A-­‐players  will  more  often  keep  their  jobs,  B  and  C  players  will  be  let  go.”    More  on  A-­‐players  later.  
  4. 4.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             4       HHHooowww      YYYooouuu      CCCaaalllcccuuulllaaattteee      TTTuuurrrnnnooovvveeerrr         The  Turnover  Rate  Explained   Turnover  rate  is  the  calculation  of  the  number  of  employees  who  have  left  the  company  expressed  as  a  percentage   of  the  total  number  of  employees.     How  to  calculate  turnover  rate   According  to  the  Society  For  Human  Resource  Management  (SHRM)  April  2013:  How  to  Determine  Turnover  Rate,   it  is  calculated  by  taking  the  number  of  separations  during  a  month  divided  by  the  average  number  of  employees,   multiplied  by  100.  This  formula  is  the  mathematical  expression  of  the  monthly  turnover  rate.           Turnover  rate  =  #  of  separations  /  average  #  of  employees  x  100     When  you  count  the  number  of  employees  in  your  company  use  employee  headcount  rather  than  full  time   equivalents  (FTE).  This  headcount  should  include  all  employees  on  the  payroll.  Be  sure  to  count  temporary  workers   who  are  on  your  company  payroll  and  employees  on  temporary  layoff,  leave  of  absence  or  furlough.    The  number   of  employees  should  not  include  independent  contractors  or  temporary  workers  on  an  agency’s  payroll.         Example  of  calculation  of  Monthly  Turnover  rate       Company  A  runs  a  headcount  report  at  the  beginning,  middle  and  end  of  each  month.  The  headcount  on  January  1   is  143  employees.  The  headcount  on  January  15  is  148  employees.  The  headcount  on  January  30  is  151  employees.   Using  the  formula     avg.  #  of  employees  =  (SUM  headcount  from  each  report)  /  number  of  reports  used       =  (143+148+151)  /  3  =  147.333     Company  A’s  average  number  of  employees  in  January  is  147.333.     The  number  of  separations  during  a  month  includes  both  voluntary  and  involuntary  turnover  but  do  not  include   employees  who  are  temporarily  laid  off,  on  furloughs  or  on  a  leave  of  absence.            
  5. 5.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             5   In  January,  Company  A:   • Had  two  employees  on  FMLA     • Let  go  of  five  agency  temporary  workers     • Had  one  employee  who  retired   • Terminated  two  employees  for  cause     • Placed  one  employee  on  unpaid  furlough       The  number  of  separations  for  the  month  is  only  three.  As  stated  above,  count  only  voluntary  and  involuntary   separations  within  the  month.  In  this  case,  company  A  had  three  separations  and  147.333  average  number  of   employees  in  January.  Therefore,  if  you  follow  the  formula,  the  company  A  turnover  rate  for  January  is  2.04%,   calculated  as  follows:     3  /  147.33  *100=  2.04%  (Turnover  rate  =  #  of  separation  /  avg  #  of  employees  *100  )     *If  you  add  all  12  monthly  turnover  rates  for  the  entire  year  (Jan.  turnover  rate  (TR)  +  Feb.  TR  +…..+  Dec.  TR),  you   have  determined  your  annualized  turnover  rate.     TTThhheee      CCCooosssttt      ooofff      TTTuuurrrnnnooovvveeerrr               According  to  the  Society  For  Human  Resource  Management  (SHRM):  Cost  of  Turnover,  turnover  costs  include  four   classifications  —  1)  separation  processing  costs,  2)  replacement  hiring  costs,  3)  training  new  hire  costs  and  4)  lost   productivity  or  business  costs.     Separation  costs  include  the  time  and  expense  required  in  order  to  exit  an  individual  from  the  organization.   Replacement  costs  generally  include  sourcing,  interviewing  and  hiring  expenses  associated  with  finding  new  staff.   Training  costs  include  the  on-­‐boarding  process  of  a  new  employee  and  the  proper  acclimation  to  the  environment   and  new  work  procedures  and  processes.  Lost  business  and  lost  productivity  costs  are  another  category  of  turnover   costs.  While  this  category  includes  the  “savings”  incurred  by  not  paying  wages  for  the  exited  employee,  it  also   includes  costs  associated  with  lost  morale,  lost  revenue  and  the  performance  differential  as  the  new  person  comes   up  to  speed,  etc.       For  purpose  of  illustration,  the  table  below  depicts  the  turnover  costs  of  a  nurse  position  in  the  Denver/Boulder   area.  In  this  example,  the  hourly  rate  for  the  nursing  position  is  $20,  and  benefits  account  for  35%  of  salary.   Although  line  item  costs  for  each  category  may  not  necessarily  apply  for  all  organizations,  many  of  them  would  be   similar.     Calculating  Turnover  Costs  (Sample  for  Registered  Nurse  Position  in  Denver/Boulder  area)     Separation  Processing  Costs:     +    cost  of  exit  interviewer's  time          (60  minutes  @  $16  x  135%)     $22.00   +    cost  of  departing  employee's  time          (30  minutes  @  $20  x  135%)     $14.00     +    cost  of  administrative  functions  relating  to  the  departure          (2  hours  @  $14  x  135%)     $38.00     +    cost  of  separation  pay  associated  with  the  departure          (40  hours  @  $20)     $800.00     +    cost  of  unemployment  tax  related  to  the  departure          (assumes  account  reimbursement  of  4  weeks  @  $337)     $1,348.00          
  6. 6.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             6   Replacement  Hiring  Costs:     +    cost  of  attracting  applicants          (annual  ad  budget  /  number  of  positions  filled)     $500.00   +    pre-­‐employment  administrative  expenses          (3  hours  @  $24  x  135%)     $98.00   +    cost  of  entrance  interviews          (5  interviews  @  1  hour  x  2  interviewers  @  $30  x  135%)     $405.00   +    cost  of  aptitude,  skill,  drug,  etc.  testing          (30  minutes  @  $14  x  135%  +  $16  +  $25)     $51.00   +    cost  of  hiring  decisions  meetings          (1  hour  x  2  interviewers  @  $30  x  135%)     $81.00   +    cost  of  post  employment  physical  exams          (assumes  performed  in  house)     $50.00   +    post-­‐employment  information  gathering  (records,  payroll,  etc.)          (1  hour  @  $14  +  1  hour  @  $20  x  135%)     $46.00   +    cost  of  signing  bonus          (RN's  in  Denver  area  currently  ranging  from  $1K  -­‐  $3K)     $1,000.00   +    cost  of  employee  finder's  fee          (Denver  area  currently  ranging  from  $500  -­‐  $1K)     $500.00   Training  New  Hire  Costs:     +    cost  of  information  literature  (manuals,  brochures,  policies,  etc.)   $10.00   +    cost  of  general  orientation          (16  hours  @  $20  +  16  hours  @  $16  x  135%)     $778.00   +    cost  of  job  orientation          (unit  orientation  80  hours  @  $20  +  40  hours  @  $25  x  135%)     $3,510.00   Lost  Productivity  and  Lost  Business  Costs:     +    cost  of  additional  overtime  to  cover  the  vacancy          (20  hours  @  $30  x  135%  x  6  weeks)     $4,860.00   +    cost  of  additional  temporary  help          (20  hours  @  $37  x  6  weeks)     $4,440.00   -­‐    wages  and  benefits  saved  due  to  the  vacancy          (40  hours  @  $20  x  135%  x  6  weeks)     <$6,480.00>   +    cost  of  performance  differential  while  new  employee  gets  up  to   speed  (96  hours  @  $20  x  135%  x  20%)     $519.00   +    cost  of  low  morale-­‐related  time  wasted  due  to  "water  cooler   grumbling"      (1  hour  @  $20  x  135%  x  5  days  x  6  weeks)     $810.00   +    cost  of  lost  customers,  sales,  profits  due  to  the  departure   (gross  profit  loss  per  patient  $3,100  per  day  x  3.5  days  x  25%  profit   margin)     $2,713.00   +    cost  of  additional  employee  departures  related  to  the  departure  (if   just  one  other  nurse  leaves,  the  cost  is  equal  to  the  total  of  these   costs)     $16,113.00   Total     $  32,226.00     Source:  ©2000-­‐2004  KeepEmployees,  Inc.  (      
  7. 7.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             7     To  replace  this  $40,000  a  year  employee  costs  $32,226,  which  is  81%  of  a  year’s  salary.     TTThhheee      PPPooottteeennntttiiiaaalll      AAAdddvvvaaannntttaaagggeeesss      ooofff      TTTuuurrrnnnooovvveeerrr               According  to  Advantages  of  Turnover,  employers  believe  that  turnover  has  only  a  negative  effect  for   their  organization.  However,  there  are  some  advantages  of  turnover  for  the  organization  that  are  listed  and   explained  below.   Talent  Infusion.      Voluntary  turnover  and  involuntary  turnover  both  make  way  for  infusing  talent  in  an  organization.   Employees  who  leave  of  their  own  volition  as  well  as  employees  who  leave  due  to  involuntary  discharge  aren’t   always  high  performers.  Employees  with  subpar  performance  drain  the  company  of  resources  and  money.  These   turnover  scenarios  create  opportunities  for  an  employer  to  recruit  new  talent  with  new  ideas  and  emerging  skills.     However,  it  is  worth  tracking  whether  the  turnover  is  voluntary  or  involuntary  to  learn  what  else  should  be   considered  when  measuring  the  performance  of  hiring  practices  and  the  assessment  of  performance  review   processes,  which  can  be  —  and  often  are  —  faulty.    That  is  a  topic  for  a  different  White  Paper.   Efficiency.      Infusing  talent  also  leads  to  updated  work  processes  with  technology-­‐driven  solutions.  New  employees   bring  a  fresh  perspective  to  the  workplace  as  well  as  new  ways  of  operating  the  business.  Many  of  their  solutions   improve  efficiency  and,  ultimately,  profitability.   Shape  Up.      Involuntary  turnover,  as  in  employee  termination,  sends  a  message  to  other  employees.  It  is  a   testament  that  the  disciplinary  process  works  and  that  if  performance  doesn’t  improve,  they,  too,  can  be   terminated  for  poor  performance,  behavior  or  misconduct.  While  this  is  a  hard-­‐line  approach  to  seeing  the   advantages  of  turnover,  it  often  works.   Morale.      Improved  employee  morale  is  another  advantage  of  turnover.  Disengaged  workers  sap  the  workplace  of   enthusiasm,  energy  and  productivity.  When  employees  who  are  performing  at  marginal  levels  leave  the   organization,  it  inspires  remaining  workers  and  returns  the  workplace  to  a  team-­‐oriented  work  environment  where   everyone  is  focused,  driven  and  interested  in  doing  a  good  job.  The  strain  placed  on  an  organization  by  managing   employees  whose  presence  affects  the  entire  workforce  is  lifted  when  those  employees  are  separated  from  the   company.   Cost  Savings.    When  long-­‐term  employees  leave,  the  company  is  no  longer  in  debt  for  high  wages  tenured   employees  earn.  Employers  can  reconfigure  their  compensation  practices  and  set  new  starting  salaries  for  less   experienced  workers.  The  cost  to  maintain  long-­‐term  employees  is  also  expensive  where  benefits  are  concerned.   Companies  that  raise  their  retirement  savings  contributions  for  tenured  employees  start  over  fresh  at  lower   employer  contribution  rates.   Lower  Benefit  Rates.      Insurers  base  their  premiums  on  age.  The  older  the  insured,  the  more  costly  it  is  to  insure   them  due  to  age-­‐related  conditions  and  diseases.  Seasoned  employees  are  generally  older  workers  for  whom  the   employer  absorbs  the  cost  of  health  care  premiums.  When  these  employees  leave  the  organization,  employer   benefits  costs  may  drop  significantly.   Employee  Retention      Hiring  excellent  employees  with  both  eligibility  and  suitability  for  the  job  is  a  significant  way   to  accomplish  companies’  goals  and  assure  the  success  of  the  business  into  the  future.       According  to  The  Wall  Street  Journal:  Employee  Retention    —  How  to  Retain  Employees,  there  are  four  tips  to   retain  employees  within  organizations:    1)  provide  a  competitive  benefits  package,  2)  provide  financial  incentives,   3)  hire  a  Human  Resource  Manager  (for  companies  nearing  100  employee  size),  and  4)  understand  employees’   expectations  for  their  jobs.        
  8. 8.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             8     Offering  competitive  benefits  such  as  health  insurance,  life  insurance,  annual  paid  vacation,  and  financial  aid  for   advancing  their  careers  through  advanced  education  are  essential  ways  to  retain  employees.  It  has  been  shown   that  these  benefits  motivate  employees  and  make  them  feel  happy  to  have  their  jobs.  Offering  financial  incentives   such  as  a  bonus  or  other  rewards,  and  annual  raises  for  employees  who  reach  performance  goals  or  stay  in  the   organization  productively  for  long  periods  are  also  critical  ways  to  keep  the  employees  within  organizations.  It  is   particularly  important  to  provide  these  incentives  for  key  players.       Hiring  HR  managers  (for  companies  nearing  100  employee  size)  is  crucial  in  order  to  effectively  train  employees  and       understand  employees’  expectations  and  concerns  about  their  jobs.  HR  managers  review  employee  benefits  and   financial  incentives  systems  to  make  sure  they  are  adequate  for  the  employees.  They  can  provide  the  company  with   various  programs  to  facilitate  cooperation,  productivity  and  boost  morale.  An  understanding  of  what  employees   expect  from  their  job  may  seem  basic,  but  often  in  small  companies,  employees  have  a  wide  breadth  of   responsibilities.  If  they  don’t  know  exactly  what  their  job  entails  and  what  their  employer  expects  from  them,  they   can’t  perform  up  to  standard,  and  morale  can  begin  to  dip.         TTToooppp      111000      EEEmmmpppllloooyyyeeeeee      CCCooommmppplllaaaiiinnntttsss      ttthhhaaattt      cccooouuulllddd      LLLeeeaaaddd      tttooo      TTTuuurrrnnnooovvveeerrr                                                                 Ten  Employee  Complaints.  A  survey  conducted  by  HR  Solutions,  Inc.  revealed  these  ten  complaints   that,  knowing  them,  can  help  an  organization  to  retain  its  employees.                                   1. Higher  salaries.    Pay  is  the  number  one  area  in  which  employees  seek  change.  You  can  foster  a  work   environment  in  which  employees  feel  comfortable  asking  for  a  raise.    Often,  employees  believe  they  need   to  change  companies  to  improve  their  relative  pay  scale.     2. Internal  pay  equity.    Employees  are  concerned  particularly  with  pay  compression,  the  differential  in  pay   between  new  and  longer-­‐term  employees.  In  organizations,  with  the  average  annual  pay  increase  for   employees  around  4%,  employees  perceive  that  newcomers  are  better  paid  –  and,  often,  they  are.     3. Benefits  programs,  particularly  health  and  dental  insurance,  retirement,  and  Paid  Time  Off  /  vacation   days.    Specifically,  many  employees  feel  that  their  health  insurance  costs  too  much,  especially  prescription   drug  programs,  when  employers  pass  part  of  their  rising  costs  to  employees.     4. Over-­‐management.  Employees  often  defined  over-­‐management  in  interviews  as:  “Too  many  chiefs,  not   enough  Indians.”  Workplaces  that  foster  employee  empowerment,  employee  enablement,  and  broader   spans  of  control  by  managers,  will  see  fewer  complaints.  A  popular  word,  micromanaging,  expresses  this   sentiment,  too.    As  costs  rise,  flatter  organizational  structures  are  an  appropriate  adjustment  that  should   be  accompanied  by  efficiency  and  effectiveness  training.     5. Pay  increase  guidelines  for  merit.  Employees  believe  the  compensation  system  should  place  greater   emphasis  on  merit  and  contribution.  Employees  find  pay  systems  in  which  all  employees  receive  the  same   pay  increase  annually,  demoralizing.  Such  pay  systems  hit  the  motivation  and  commitment  of  your  best   employees  hardest  as  they  may  begin  asking,  “What’s  in  this  for  me?”     As  you  adopt  a  merit  pay  system,  one  component  is  education  so  that  employees  know  what  behaviors  and   contributions  merit  additional  compensation.  Employees  who  did  not  improve  must  be  informed  by  their   manager  about  how  their  performance  needs  to  change  to  merit  a  larger  pay  increase.              
  9. 9.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             9   6. Human  Resources  department’s  responsiveness  to  employees.    The  Human  Resource  department  needs   to  be  more  responsive  to  employee  questions  and  concerns.  In  many  companies,  the  HR  department  is   perceived  as  the  policymaking,  policing  arm  of  management.  In  fact,  in  forward  thinking  HR  departments,   responsiveness  to  employee  needs  is  one  of  the  cornerstones.     7. Favoritism.    Employees  want  the  perception  that  each  employee  is  treated  equally  with  other  employees.   If  there  are  policies,  behavioral  guidelines,  methods  for  requesting  time  off,  valued  assignments,   opportunities  for  development,  frequent  communication,  and  just  about  any  other  work  related  decisions   you  can  think  of,  employees  want  fair  treatment.     8. Communication  and  availability.    Let’s  face  it.  Employees  want  face-­‐to-­‐face  communication  time  with  both   their  supervisors  and  executive  management.  This  communication  helps  them  feel  recognized  and   important.  And,  yes,  your  time  is  full  because  you  have  a  job,  too.  But,  a  manager’s  main  job  is  to  support   the  success  of  all  his  or  her  reporting  employees.  Through  employee  performance  the  manager  magnifies   his  or  her  own  success.     9. Workloads  are  too  heavy.    Departments  are  understaffed  and  employees  feel  as  if  their  workloads  are  too   heavy  and  their  time  is  spread  too  thin.  This  complaint  becomes  worse  as  layoffs  increase;  the  economy   slumps;  your  ability  to  find  educated,  skilled,  experienced  staff  gets  more  difficult;  and  your  business   demands  grow.  To  combat  this,  each  company  should  help  employees  participate  in  continuous   improvement  activities.     10. Facility  cleanliness.    Employees  want  a  clean,  organized  work  environment  in  which  they  have  the   necessary  equipment  to  perform  well.     DDDiiimmmiiinnniiissshhh      TTTuuurrrnnnooovvveeerrr      ———      HHHiiirrreee      AAA-­‐-­‐-­‐PPPlllaaayyyeeerrrsss      iiinnn      ttthhheee      FFFiiirrrsssttt      PPPlllaaaccceee         All  of  these  variables  impact  performance  and  job  satisfaction,  so  retention  starts  with  the  hiring  process.    “The   FIRST  place  to  manage  turnover,”  according  to  Pamela  Stambaugh,  President,  Accountability  Pays,  “is  to  get  the   right  people  in  the  right  roles  in  the  company  and  then  support  their  growth  and  development.”  Among  senior   executives  is  a  well-­‐accepted  realization  that  A  Players  hire  other  A  Players,  and  B  Players  hire  C  Players.         Another  reviewer  commented,  “This  is  exceptionally  true  but  some  companies  do  not  understand  this  because  they   treat  any  dollars  out  of  pocket  as  expenses.    An  A-­‐Player  adds  better  value  and  the  ROI  on  an  A-­‐Player  is  much   greater  so  the  cost  differential  is  an  investment  and  should  be  viewed  as  such.”      Competitive  advantage  is  achieved   by  having  great  people,  treating  them  well,  and  keeping  them  employed  in  a  challenging  and  fulfilling  environment.     While  there  are  many  assessments  on  the  market  today,  most  of  them  claim  to  solve  hiring  problems.    Some  —   such  as  personality  tests  —  can  actually  create  legal  liability  because  they  do  not  report  job-­‐specific  feedback,  so   they  are  not  EEOC  compliant  and  can  create  adverse  impact.    The  one  assessment  that  looks  most  deeply  at  both   eligibility  and  suitability,  and  is  structured  so  that  you  save  both  time  and  money  AND  identify  the  best  person  for   THAT  job,  is  the  Harrison  Assessments  Talent  Solutions.    It  is  EEOC  compliant  and  has  no  adverse  impact  because  of   its  job-­‐specific  reporting.  
  10. 10.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             10   Too  many  assessments  fall  short  of  the  goal  of  quantifying  their  considerations  of  eligibility  (CAN  someone  do   the  job)  and  they  ignore  suitability  (do  they  WANT  to  do  the  WORK)  because  they  think  it  cannot  be   measured,  but  it  can.    Here  is  the  typical  challenge,  and  the  typical  level  of  quantification  of  the  attempt  to   select  the  right  candidate.    What  if  knowledge  of  medical  equipment  is  irrelevant  because  it  will  be  trained   anyway.    Too  often  too  little  is  known  about  the  relative  weight  of  these  variables.  In  fact,  the  Harrison   Assessment  quantifies  all  of  these  factors  and  combines  them  into  an  ideal  performance  benchmark  called   the  Job  Success  Formula.         Unique  to  the  Harrison  Assessment  is  the  very  important  capability  to  weight  each  of  these  factors  according   to  job  impact.    The  Harrison  Assessment  measures  suitability  including  156  behavioral  preferences,  a  robust   quantity  of  data  that  is  reported  job-­‐specific.    Currently  the  Harrison  Assessment  hiring  system  includes  6,000   job  success  formulas.    Below  is  an  example  of  the  time  and  money  savings  of  using  Harrison  Assessments.     SSSaaammmpppllleee      HHHaaarrrrrriiisssooonnn      AAAsssssseeessssssmmmeeennntttsss      TTTaaallleeennnttt      SSSooollluuutttiiiooonnnsss      CCCaaassseee      SSStttuuudddyyy       Position:    Assistant  to  CEO    197  Applicants    96  Short  Listed    4  Brief  Phone  Interviews  and  1  face-­‐to-­‐face  interview    1  Hire     The  previous  similar  campaign  took  more  than  45  hours.   This  entire  campaign  was  completed  in  8  hours.   Total  Cost:    $912  or  $8.45  per  applicant,  including  Applicant  Tracking  System  (Harrison  Assessments  system)        
  11. 11.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             11        
  12. 12.    White  Paper,  12  pages,  on  Employee  Turnover,  by  Pamela  Stambaugh  and  Ryoji  Nakamichi,  —  July  22,  2013             12     If  you  are  interested  in  learning  more  about  the  Harrison  Assessments  Talent  Solutions  or  working  with   existing  teams  to  improve  performance  and  productivity,  please  contact  Pamela  Stambaugh.     Pamela  Stambaugh  is  a  graduate  of  Lewis  and  Clark  College  in  Portland,  Oregon,  earning   her  MBA  at  the  University  of  San  Diego.    Founder  and  President  of  Accountability  Pays  for  27   years,  Pamela  is  a  seasoned  advisor  to  business  leaders  and  their  teams,  providing  training,   coaching,  and  team  facilitation  in  improving  performance,  productivity  and  results  through   people.  Pamela  has  coached  and  provided  senior  executive  team  building  experiences  since   1999.  She  has  worked  globally  with  senior  executives  including  five  years  as  a  TEC/Vistage   chair.  She  has  co-­‐authored  two  business  books.         Pamela  is  Master  Distributor  of  the  Harrison  Assessments  Talent  Solutions  (HATS),  as  well  as  a  partner  to  The   Table  Group,  Patrick  Lencioni  (5  Dysfunctions  of  a  Team),  and  facilitator  of  The  Speed  of  Trust,  a   transformational  program  for  senior  executives.    Her  clients  include  CBIZ,  GE  Healthcare,  Life  Technologies,   Anthony’s  Foods,  IABA,  Magma  Technologies  as  well  as  many  others.     Ryoji  Nakamichi  is  completing  a  certificate  program  in  International  Business  Operations  &  Management  and   Project  Management  at  UC  Irvine.    He  has  a  BA  in  Economics  from  Daito  Bunka  University,  Japan.    Ryoji  is  a   summer  intern  at  Accountability  Pays.    When  not  in  school  in  the  United  States,  he  resides  in  Mie,  Japan  (near   Osaka).    In  the  future  he  would  like  to  work  in  Human  Resources.