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You're Turnover Number Doesn't Bother you?...It Should!
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If you're doing any internal metrics beyond sales numbers, you probably know your turnover rate. You might even have it broken down by "Voluntary" and "Involuntary" type. If you're taking the time to do the math, why aren't you concerned with whatever the numbers tell you? Doing something to lower turnover would put $$$s directly into your bottom line!

Say you have a small company of 100 people doing $12.5M in sales making 20% profit. If you're turnover is 33% you are loosing about $1M in replacement, retraining and lost productivity costs annually (trust me, that's a conservative estimate). Not to mention the fact that your managers and recruiting teams are spending double the amount of time interviewing and training people.

If you did some inexpensive things to reduce turnover - of any kind - to 18%, you'd put at least $500k back into your profit number making you a 24% profit margin company. That's an 18% improvement in profit without a dime of improvement in sales! Would you take that?

The trouble is, most people don't have a clue how to even begin reducing turnover. They say something like, "33% is not bad" or worse, "they (the people that quit) weren't right for us anyway". Wow! You'd never say, "last year's sales are good enough" or "that client (who didn't buy) wasn't a good one anyway".

Basic steps in reducing turnover:

1. Hire right in the first place! (a whole 'nother posting to come later)

2. Listen to people - regularly and often - foster an environment of trust so you'll get the real story

3. Review people's performance frequently - and honestly

4. Reward them with psychological paychecks - and well deserved bonuses when possible

5. Ask your people (surveys or in "town halls") what's working and what's not - be open and act on key issues

6. Get rid of the under-performers fast - good people leave when they see you not doing that



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About the Author

Rod Swartwood, HR Prime, LLC
1042 N El Camino Real Ste B353
Encinitas, CA 92024
760-533-3596

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