"We're Are In The Process of a Pretty Extensive Staff Turnover Exercise"

This last week I received an email from a client which absolutely floored me. The client actually said they were "in the process of a pretty extensive staff turnover exercise right now". There are few work-related things that take me by surprise these days, but this comment left me speechless. What employer in the current labour market feels they really can afford to have (or in fact actively encourage) high employee turnover?! If the fact was that this particular employer was encouraging staff turnover because they had under-performing and/or under-skilled employees, then that says to me that they have two inherent problems with their HR (neither of which will be solved by a "staff turnover exercise"):

1. Their recruitment processes are not hitting the mark. They are failing to source, attract and hire the right staff from the beginning. An "extensive staff turnover exercise" is only going to exacerbate this situation unless the organisation re-engineers their recruitment processes.
2. Their performance management systems are not working. Performance management encompasses employee rewards, as well as improvement programs, counselling warnings and termination. The best performance management systems encourage good performance and continuous improvement of employees. An "extensive staff turnover exercise" is not going to address the inherent issues with employee performance.

It concerns me that there are employers out there who would rather increase their costs of employment exponentially by actively encouraging employee turnover, rather than invest a fraction of that cost into professional HR management, performance management, reward systems and recruitment processes that would resolve these issue and add value to their bottom line.

When you consider that the average cost of turnover is fifteen times a person's salary/wage, encouraging employee turnover is a high risk, low return option no matter which way you look at it.

Let's do the sums:

This particular employer has 30 casual employees, all engaged on the minimum wage for their industry ($19.12 per hour). The average employee works 22 hours per week, and has been engaged with the organisation for 6 months. The employer's "extensive employee turnover exercise" is aiming to turnover 50% of all of the employees.

The average employee has earned a total of $10,936.64 during the period of their employment. The total cost to the employer of turning over 15 of these employees will be $2,460,744! It is staggering when you do the sums like this.

Most businesses, especially small businesses like this one, could find better uses for their $2+Million! Investing just 10% of this cost into a well-structured rewards program can increase employee retention by up to 40%! A good recruitment strategy can also reduce your chance of mis-hire by 90%. A good performance management program can increase productivity by 20 - 30%!

So why waste money on an "extensive staff turnover exercise" which produces no positive outcome for your business at all, when a fraction of the cost, wisely invested in developing good HR system will not only directly save you money, but positively impact on your bottom line!

Power2Motivate is an online employee rewards management platform. It has and no set up fees and no ongoing monthly administration fees. You only pay for the points you reward! By investing in employee rewards in you business, you can increase your organisational profitability through reduced turnover, better engagement and higher productivity. As Power2Motivate does not charge ongoing administration fees, your rewards investment goes directly to your employees. Click on the link to check out Power2Motivate!