Contributed Column

Personnel Points

by Dave Mount, Westaff

Employee turnover

I hate employee turnover. It's one of the most wasteful items that companies have; it is preventable and costly.

In February, a Wall Street Journal article about Domino's Pizza caught my eye. It said that Domino's, one of the purveyors of entry-level, minimum-wage jobs in America, was working to reduce turnover. Domino's calculated that it cost the company $20,000 every time a store manager quit and $2,500 every time an hourly employee quit.

Domino's has 15,000 employees in company-owned stores, and the turnover rate was 158 percent in 1999. That means that in order to maintain the 15,000-employee level, Domino's had to hire 23,700 people. If we carry this one step further and assume that all 23,700 people were hourly workers, it cost Domino's $59,250,000 to replace their dissatisfied employees. That amazes me. For a company with sales of $1.4 billion, it represents over 4 percent of sales.

I am not a Domino's Pizza type of guy, but I know what happens when the people in my favorite restaurants and shops turn over. Customer service suffers and stifles the urge in customers to return.

I remember having lunch at my favorite restaurant and, as usual, had a green waitress. When I received my check, I put my credit card down and she looked at me and said, "We don't accept Diners Club." I responded that I had been eating there for 15 years and they did, indeed, accept
Diners Club she should ask the owner. She took the card and went away.

That's what happens all the time. New employees don't know your company and they don't know your policies. They make customers angry, and angry customers usually don't come back. Think about the establishments that you no longer want to visit. The chances are the root of the problem is a service issue, which a tenured employee would have solved in a minute.

Domino's found that management was the root of the problem with its turnover. It was not wages, hours or benefits, but management. Managers in today's world just do not know how to manage people.

I have been working full time since I graduated from college in 1967, and during that time I have seen many changes in management styles and fads.

When my father retired from his job in 1975, he had worked for the same employer since being discharged from the Army after World War II. This was the case with many people the depression had deeply scarred them, and memories of 15 percent unemployment rates made the work force more loyal. Management practices that today would seem outrageous were commonplace, yet people stayed and were loyal to their employers. The one overriding practice, though, was that companies and employees looked out for each other. Most employment was for life or until retirement.

In those days, job and family were the two most important items on a person's list of self-actuators. Today, people's jobs no longer define who they are and job changes are much more frequent.

My own peers averaged six job changes over their lifetimes. That means the average job tenure was about eight years. Since it takes a while to "get into the groove," there were usually more changes early in one's career than later, so the eldest of my peers have still had a long tenure with their employers.

American economic cycles have led companies to rethink their long-term employment practices and, in turn, have led employees to rethink their priorities. One's job is no longer the self-actuator that it once was. Home, family, hobbies and recreational activities top most employees' lists of the most important things in their lives. Employers are fortunate if they make the top five.

People no longer have the eight-year average tenure in a job. Rather than make six job changes over a lifetime, people tend to make six career changes over a lifetime. For example, a person may work at this bank and then that one for a few years, and then decide to become a chef. Making six career changes leads to much more frequent job changes. Management must react to this trend or the result will be the declining sales, increasing training costs and costly errors that come from short-tenured staff.

Family-friendly policies, collaborative management and making sure employees understand the importance of their jobs are three ways that companies can reduce turnover. Where turnover is a problem, managers must be willing and able to address them. •

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