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Increase Profitability – Labor Turnover

Jul 23Jeff Matthews

It is obvious that lower turnover keeps training costs low.  But turnover is also reflective of other issues in an organization.  Is the work environment a place where employees want to get away from?  Is the pay scale competitive?  Is your hiring and screening process weeding out those who can’t cut it in your work place?  Is advancement a possibility for your employees or do they need to leave to get ahead?  Do your employees know that you respect them and want them as members of your team? 

The work environment translates to culture.  Is your environment autocratic or a team building culture?  Are there clearly defined rules that your employees know they have to follow, or do the rules vary based upon who committed the violation?  Having a workplace that people look forward to being a part of, that they encourage their friends to join, can dramatically reduce your hiring costs.

Properly compensating your employees is very important.  You can build a manageable compensation program that rewards efficiency and encourages longevity.  When you think about compensation don’t overlook benefits.  In this time of government involvement in benefits, employee’s interest in competitive benefits has been highlighted.  Major lower wage employers are not offering health care or worse cutting employees to part-time to avoid health care costs.  Retirement benefits can easily be structured to include vesting and sliding matching rules that encourage employees to stay.  The key is to be competitive so that your employees believe they have a fair wage and benefit structure.

Many in HR are fans of outside testing services to screen new hires.  I agree with them and I also encourage you to think through what hiring questions you want to know the answers to when interviewing.  Then be quiet.  Don’t dominate the interview process but draw out the prospect to talk about their work history and life.  You will get clear clues from listening that testing should corraborate.

I once worked for a firm that had variable shift work.  The senior employees were brought on first and the junior folks worked when we had enough volume.  Our hours could be round the clock and employee’s shifts could vary often.  Some folks could not handle this uncertainty and our process needed to screen them out as fast as possible.

Advancement spells achievement and the chance to earn more.  It rewards those who excel with more responsibility.  If your newer employees don’t see a path to bigger and better, they will leave when an opportunity presents itself.  Look at your culture from their eyes and determine ways to encourage employees even if you can’t build a clear path to advancement.

You deserve a bright and eager team who understand your goals, buy into your plans and will enthusiastically help you build the company.

B2B CFO® has over 200 experienced chief financial officers have deep knowledge that can be tapped to help grow your business.  A B2B CFO® can help you understand your financial picture and offer independent insight to improve your business’ profits.

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