Should You Care About Employee Turnover Rate?Tuesday, March 26th, 2019
Larry discusses the correlation between employee turnover rate and contractors that chronically struggle. Watch on YouTube.
There is a strong correlation between high employee turnover rates and companies that continuously struggle. A company with a high employee turnover rate has more difficulty with growth and profitability. This is why you need to care about turnover rate.
If you have problems with leadership, culture, or how you treat and manage people, then you are going to have a high employee turnover rate.
When people keep leaving, it is a cause of low performance for your company.
This low performance makes sense. New people take a while to get good at their jobs and can’t make significant contributions until they learn and have experience.
Without long-tenured people and their experience, the business owner is fighting fires on the front lines all day.
When employees stay for long periods of time, it helps to -
- Provide stability. Other employees see everyone else staying, so they stay, too. Things are consistent and there is less drama.
- Increase quality and reduce mistakes. Employees who stay learn how to do their jobs well. You have invested in their education and their mistakes, and now they can produce for you. Your customers will be happier with the experts showing up at their home and the great results they produce.
- Improve reputation and get more referrals. Experienced employees will get you a better reputation and you’ll get more referrals. Better reputation and more referrals drive overall lead cost down and makes it easier to make a profit.
- Reduce recruiting and training time. When you are training a replacement for a good person who left, you aren’t gaining ground, you’re just working to stay where you were.
- Reduce management time needed. Experienced employees need less instruction and oversight. Their performance is predictable – and scalability depends on predictability.
- Improve teamwork by increasing trust between team members. As people work together for years, they develop trust and loyalty as they get to know each other; and that matters a lot for a team to function well.
- Increase productivity. Experienced teams will produce not only higher quality work, but more of it. You get more dollars in for the payroll you pay out each week as the team is fully engaged.
- Reduce accidents and improve safety. Experienced employees make fewer mistakes and guide new employees toward improved safety
- Make a profit! All these factors add up to making a profit… or not.
An 11th HVA for Larry is Retaining Your Best Employees or Keeping a Low Employee Turnover Rate.
There are a lot of benefits from one factor!
There’s a lot more to learn about employee turnover rate and how to improve yours in the School of Entrepreneurship’s 7-part exercise with Action Guide called “Employee Turnover Rate.”