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Why Companies Should Take High Employee Turnover Seriously (and Why They Don't)

written by: Sylvia Cochran•edited by: Michele McDonough•updated: 9/24/2011

Employee satisfaction is a key component for good customer service. If you accept this as being a true statement, why are there so many companies and industries that fail to curb high employee turnover? Consider the ways this practice hurts businesses and why it is nevertheless ignored.

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    Alarming Employee Turnover Statistics

    In 2001, Nobscot Corporation identified Canada and the American Northeast as geographic hot spots for annual worker turnover. While the number indicates 22 percent employee turnover in Canada, it shows 18 percent for the Northeast. The lowest turnover -- only 11 percent -- is found in America’s mountain states. By industry, business services (at 23 percent) and retail (with 22 percent) come in as the dubious leaders in failed employee satisfaction. More successful by far are the mining industry (only five percent) and travel-related businesses (nine percent).

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    The Cost of Doing Business?

    “Poster: ‘When You’re Fighting Fire You’re Not Logging’” by National Archives/Wikimedia Commons via public domain license For the human resources manager or supervisor who believes that employee turnover is simply the cost of doing business, it pays to take a page from the playbook of the pros. Case in point is Trader Joe’s. Workforce Management Online highlights that customer service is more than just basic check-out assistance. In addition to providing all the services that larger chain grocery stores offer, employees add a personal touch to their interactions with consumers.

    Of course, this type of value-added service does not occur by accident. It requires staff members who are comfortable in their roles and trained in product knowledge. Employee turnover is the enemy of this type of training. Sure, it is possible to quickly get a new worker up to speed on the basics of customer service, but it takes a seasoned clerk to go past the basics. Accepting that retail is simply the kind of field where hiring and quitting occur at an accelerated pace makes it impossible to capitalize on the staff’s talents. “Where turnover is high, customer service is virtually nonexistent,” the author remarks.

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    Business as Usual vs. Business-Building Customer Service

    Reducing high employee turnover is possible in any industry. Competitive pay, reasonable benefits, respect and opportunities for advancement within the company are just some of the antidotes to a revolving door. Even so, selling executive level management on the idea is virtually impossible. While much lip-service is given to retention, little actual follow-through accompanies the protestations of valuing the employee.

    Cronyism, racism and sexism frequently play into hiring and firing decisions. Able employees are overlooked in favor of workers the manager brought with him or her from another branch. The weak economy makes it difficult for workers to quit; what would have been grounds for a hostile work environment lawsuit a few years ago, now simply becomes “business as usual.” Infighting among staff members results, usually in the hopes of scoring brownie points with an authoritarian manager or micromanaging director. Lacking harmony, customer service becomes a minimal concern to workers; keeping the job becomes the focus goal.

    This attitude costs companies in the way of customer loyalty. Since large corporations usually only operate with paper data, it is impossible for executives to see the microcosm of offices and stores. As a result, number-driven goal-setting leads to the employment of even more autocratic managers who think little about employee satisfaction and instead focus on meeting benchmarks. A vicious cycle for sure, there is little that the individual worker can do from within to change the corporate culture.

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    A Fish Rots From the Head Down

    Employee turnover is an expensive proposition on the customer service level, but it also costs the company a good deal of money to replace staff members. The University of Missouri details that it costs $3,700 to replace one minimum wage employee. Productivity takes a hit; the learning curve makes new hires not as effective as seasoned employees. We have already discussed the problem of customer service. Yet consider also that an acceptance of high attrition leads to a scaling down of the applicant pool; workers must be replaced quickly, and frequently the quality of candidates may not be as high as is desirable. Thus, the cycle continues.

    It is clear that companies should take high employee turnover seriously, even as they create a corporate environment that makes employee-focused workplaces difficult to realize without a changed understanding of the role of the supervisor. Turning around this ship requires a shake-up and change in executive-level management. Retraining supervisors to become coaches rather than detectives looking to catch workers for the next write-up is an integral step in the process. This goes hand in hand with removing the potential for retaliation in the workplace. Focusing initially on the retention of existing staff members, human resources managers must re-evaluate hiring practices to avoid mistakes made during this process. Only if there is significant change in the company boardroom can any type of attrition management become successful.

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    Of course, with a management team made up of autocratic professionals, it is difficult to find sufficient motivation for change. Unless the economic climate improves -- and companies will be forced to redo workplace practices so as to retain staff and maintain competitive customer service or productivity levels -- there is little hope to affect change any time soon.