Employee turnover is a fact of life in business. Some of it is good; some of it is not good. Employees move on for many reasons, including better jobs, more money, furthering their education, geographic relocation, and other reasons. And, other employees are “encouraged” to leave – i.e., are terminated, for performance or other reasons. When employees decide to leave, and provide ample notice, often a replacement can be found quickly such that the departing employee can help with training. This is the best way transitions occur. But, more times than we would like, transitions have been difficult and one in particular stands out in recent memory. The employee was performing reasonably well given his tenure and experience, but he quit on short notice. In thinking about his departure I have thought of the many costs to my business partner/spouse and I, the employers, of such turnover. I started thinking that the first 6 of his 10 months tenure was mostly training or experience building – meaning he didn’t really “earn his keep” and the portion of his salary for that time was lost on training – and gone forever upon his departure. Then, there is the training required of other staff who had to cover his work upon his departure, including his replacement. The costs to the employer for recruiting and hiring include the costs of advertising and the time spent placing the ads. This is at least 3 to 10 hours of managerial time. And, then there is the time spent reviewing resumès and interviewing potential replacements. Time is money, and the time lost on finding the replacement can be substantial. Then, there is training that new hire – the aforementioned 6 month learning curve for us. There is a cost associated with the employee’s salary as well as the time required for staff and management to train. Other costs include having the computer techs reset the passwords, logins, etc. All of this is to say, turnover is expensive and takes a toll on business owners. Some people would say that this is a reason to keep employees happy and if you do, all will be fine. That is simplistic and unrealistic. It doesn’t work that way. It would be nice if employees who accept jobs do so with the understanding that their hiring is a 2 way street and they have to earn their keep. They are entrusted to do the job, treated respectfully, and paid fairly. When they decide to abruptly jump ship, a painful cycle will repeat itself for the business – and they move on unaware or uncaring. Yes, there are times when employees are terminated and the business accepts the costs for other reasons. But when performance is strong, or at least acceptable, these shocks to the system are disruptive, and expensive. Employees considering changing jobs would be well advised to discuss concerns and offer employers an opportunity to resolve issues, if they exist. This courtesy will be appreciated and taking the long term view is generally a good career move.
The primary job for which my company needs employees is an entry level position requiring a college degree in psychology or another social science. Because my partner and I hire people soon upon their college graduation, their job at Magnus is often the first professional job they have ever had. Furthermore, because we hire only people who are truly “above average” (based on their college transcripts and extensive interviewing, including a lengthy written interview), we expect them to work for us for only a few years, then leave for graduate school or law school. Thus, our business model has always involved built in turnover in this position. We, in fact, encourage our bright young employees to leave our employ to further their education and we routinely write letters of recommendation and take other proactive steps to ensure their admission to graduate or law school. This planned turnover is as much a cost of doing business as any other expenditure we have. However, when an employee conducts himself/herself in ways other than what my partner and I intend, the costs of turnover can be astronomical for our small business. In that the job for which we hire this level of employee has a steep learning curve, involving considerable training for an average of 6 months, the newly hired employee is relatively “useless” to our company during this training period. It is only after he/she becomes fully trained in performing all aspects of the job that the employee earns his/her keep, so to speak, and becomes a valuable member of our team. The employee who sparked this post by David informed us at the time he was hired that he was keenly interested in our type of work because he had plans to go to graduate school, to obtain a Ph.D. in psychology. Although he was certainly far from the best employee we have ever had, he was also certainly not among the worst. (As a former college professor, I routinely grade people’s performance; I would give this employee a B-.) This person’s shocking resignation was difficult for our small organization to absorb in many ways, and the after effects have been well summarized by David in this post. Interestingly, upon being informed of this employee’s resignation, I responded, “Well, you’ve only been here 10 months and you sure have wasted a lot of time.” He seemed surprised and quickly said, “No, I haven’t. I have learned a lot while working for you.” He was even more taken aback when I said, “I’m not talking about your time. You have wasted MY time”! What I didn’t mention was, in addition to wasting my time, he also cost my company, my partner, and me money that, so far, has not been recouped.
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