Five Steps to Reducing Turnover

Five Steps to Reducing Turnover

Controlling the rate of turnover is one of the biggest challenges faced by companies today. As the economy improves it will become even a bigger challenge. What company doesn’t want to keep its good performers? Here are some general tips for tackling the issue head on. Read them over. Before you decide they won’t work in your industry, ask yourself why. Challenge the status quo.

 Step 1. Respect other people, no matter what side of the fence you’re on.

I guess I was about 5 years old. My mom was holding my hand as we walked in downtown Pasco, Washington to get me that new pair of shoes she promised. I remember feeling real proud. Everybody’s proud walking next to their greatest supporter! We passed a lady my mom knew. When my mom introduced me to her, the lady said, “How are you, Michael?” I responded with a big smile, “fine.” As we moved away, my mom seized the teaching moment. “Michael,” she said, ‘when someone asks how you are, you should say, “I’m fine, thank you. How are you?” Five years old and I never forgot that lesson. I think they call that respect. It’s what one person owes to another at the outset. It is not earned; it’s owed. No strings attached. It starts at the top and trickles down.

Step 2. Measure how much turnover is costing you. Keep the numbers real.

 The frustration in Drew’s voice was unmistakable: “Turnover is killing us.” As CEO he was ready to challenge head-on the assumption that high turnover in the service industry is inevitable. He put me at the head of a committee to determine how much turnover was costing us. I researched all the formulas. There are lots of them, some published by the Department of Labor and some by business writers. But, Danny, the COO and crack “numbers guy” said, “The formulas don’t agree, and we have over 100 general managers in the country that won’t accept numbers that aren’t real to them.” So, we carefully measured actual costs to the penny—sacrificing general “hidden” costs assumed by other estimates. We generated real world numbers relevant to our business.

Step 3: Hire right!

In Good to Great, author Jim Collins, got right to the point: “People are not your most important asset. The right people are.” Ponder just what that means. Fundamentally, it means hiring the right people for your industry, paying them a fair wage, and nurturing a culture of mutual trust and respect. It also implies that you have done your homework. You have researched the kind of person who is “right” for the industry. Each industry is unique. But here’s the kicker: Did you know that most industries attract people with similar traits? The research is out there. Decide the right fit and then go find them, hire them, treat them right and fully engage them in the company.

Step 4: Select the right leaders; support them and hold them accountable.

“People don’t quit companies, they quit supervisors!” Anybody who has worked in corporate America knows the truth of that statement—or at least they should. Why is it true? It’s true because the direct boss is the company to the worker. In sociological terms, the boss is that “significant other” who has power over the direct report. Although that power seldom extends to firing, the boss carries a lot of influence there, too. A good leader can stem the downward stream of people leaving the company, and even turn it around. Select supervisors with care. Give them your support. Hold them responsible for turnover to a reasonable extent. Consider making it part of personnel evaluations for supervisors. Never overlook the significance of the boss-subordinate relationship. It is key to keeping turnover manageable. If the new boss was promoted because of technical expertise and turnover goes up, consider some outside coaching in “people” skills.

Step 5: Share the information. Make reducing turnover the priority.

If you’re serious about reducing the rate of turnover, you have to measure it on an on-going basis and publicize your progress inside the company. Every office and every region should know what their turnover trend is at any given time and how much it is costing. Reducing turnover has to become part of the culture. Accepting the status quo must not be an option. Take a look again at Step 2, above. The data generated in that step should become common knowledge within the company. In Drew’s company, Debbie publishes the data monthly and the numbers are discussed in business reviews. In many of the offices each supervisor’s “numbers” are reviewed by the general manager and discussed with the supervisor. Has it worked? Absolutely! The downward trend in turnover has continued for the five years since the process was implemented. Controlling the rate of turnover is now part of the culture.

What do you think? Send comments to: