How Much Is Turnover Costing Us?

“It's costing me a fortune,” Greg said as he charged through the door. He never had learned to knock, but then again, he owns the company.

Greg founded Admiral when he was just seventeen and, over the past twenty-five years, he has grown the business from a one-man operation to a small army of around four hundred employees.

Today, he is a successful and wealthy businessman, but whenever people ask him what he does, he always replies, “I'm a janitor.” From time to time, he will attend a black-tie affair and people will laugh at his answer, thinking he is joking. But discovering he is serious, their laughter quickly diminishes into embarrassment.

Greg is an entrepreneur — he can sell anything to anyone and has an uncanny ability to see trends and opportunities long before anybody else. But he can also be a little scattered and a bit of a hothead, and that's why Simon was hired as general manager four years ago.

“What's costing you a fortune?” Simon volleyed, though he knew exactly what Greg was talking about.

“Turnover!” Greg said, visibly exasperated.

On Friday afternoon, Simon had left the month-end reports on Greg's desk. Among those reports were the quarterly turnover numbers. Over the last three months, Admiral's turnover had been 107 percent. That's right. In the past ninety days, 428 employees had left Admiral.

“It's hard to know how much this is costing us,” Simon said. “We are having to hire for some positions three times a quarter. And it's not just recruitment costs. Turnover affects morale, efficiency, and customer relationships. I've been telling you for twelve months that it's a big problem.”

Greg nodded. “I know, I know. It's just that now we're starting to lose clients over it. I had a call from Charlie down at P & G today, telling me we're getting a warning letter putting us on a ninety-day probationary period. He says our work has been sloppy and they've noticed a constant flow of new faces, and they feel like things are falling between the cracks.”

Simon just sat there, staring at Greg in a bit of a daze.

Greg continued, “So you've got my attention. Give them a pay raise, won't that make them stay?”

“I wish it would, but I'm not sure,” Simon replied. “I don't want to just throw money at the problem. Let's find out what's causing the turnover. Let's find out why they're leaving.”

“How will we find that out?” Greg asked.

“We'll ask them,” said Simon.

“Huh!” grunted Greg. Clearly, this idea had never occurred to him.

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