You get what you tolerate
I had a short conversation with a friend of mine. He’s a manager of a large retail store and he’s found a way to manage insanely high turnover rates.
Enjoying a fully staffed store at 245 employees, he once struggled to keep his store above 85% full in 2007 and 2008. He was paying bags of overtime and was continually on the hunt for ‘warm bodies.’
“It was just so hard to find people who wanted to work here. Now, I don’t have that problem.”
“So, what’s your annual turnover?”, I asked.
He replies quickly, “annualized… it’s still tracking at about 177%.”
So he’s got a fully staffed store but he’s experiencing incredible turnover rates. He said he had about 420 terminations last year and the trend is continuing like that.
I asked him how he can possibly manage having to hire and exit almost 2x his entire employee population each year?
He said it’s not that much of a problem; he simply plans for it. Two thirds (66%) of his turnover will have under 3 months of tenure. About half of his exits are under 30 days of tenure.
I’m still not sure how he handles all this, so I ask again…
He says, “Well, when I hire someone, I just log when they will be leaving. I ask them straight up as if it’s expected they will leave soon. I mostly hire travelers and students. They show up AND work hard. I know they will be with me for a few weeks to a few months and that’s about it. Each week I get an exit report telling me how many people will be leaving next week and I then plan those hires out a week ahead of time.” He adds, “If I can work it, I have the exiting staff train the new recruits!”
So, instead of trying to beat it and find ways to hire longer term staff, he’s worked out a way to tolerate it. I didn’t ask him about his cost of turnover, but I wanted to. I thought it might freak him out too much. The numbers can be staggering.
Depending on which source you find, who you speak with, what time of year, which industry, the level of role, the prevailing economic cycle and whether or not it’s a full moon – you’ll get a different answer on how to calculate turnover costs.
You might even try this cool turnover cost calculator, but it’ll never give you exact numbers.
Why tolerate the turnover and the massive costs when it’s a great time to find better candidates. Just have a look in your applicant tracking system, you should have 1000s of candidates in there to reach out to. If you don’t, contact us.
