Profit Leak 5 – Do You Have Retention Issues?
Is your retention issue the result of poor leadership, process, or strategy? In my experience, it is usually a combination of the three. Are you getting to the bottom of it? In fact, how strategic is the person you have running your human resources department, and how often do you have that person participate in your strategic planning meetings?
Many of the companies I’ve encountered are underinvested in their human resources departments, and it shows.
This kind of profit leak has four components:
Institutional knowledge and relationship with a customer.
All costs connected with hiring replacements.
Onboarding and Ramp-up
Time and money to get new hires trained and up to full productivity, and organizational disruption while others try to take up the slack during the training period.
If a position is open for any period of time.
Leadership deficit is the number one reason for your retention issues.
A poor manager is the number one reason why a person quits a job. So if you have high employee turnover, this is the place to start. Too often leaders, especially owners, are set in their ways. They are not flexible in how they treat their employees. While this is their prerogative, it is costing them big bucks. Even when you retain employees in spite of such poor leadership, you still wind up with a leaky bucket.
See Profit Leak #2 about how “unengaged” and “actively disengaged” workers affect your company’s bottom line.
Important Questions for Retention Issues
- Does your industry experience higher turnover in certain positions compared to others (e.g. sales vs. accounting)?
- Do you view this as problem or a strategic opportunity? The company that is able to solve its turnover problem has a huge competitive advantage.
- What have you done to dramatically reduce the amount of turnover in a problematic position?
- What strategies are you using to influence people to stay?
- Are you doing the right things to attract the right people for the position to begin with?
- Do you provide the right (and enough) training?
- How do you take care of these people?
- What special incentives do you have that encourage longevity?
- What is special about your work environment compared to others?
- Are your expectations for the position reasonable?
Cost of Employee Turnover
In most cases, there are solutions to improve employee turnover. Most companies do not properly calculate the cost of the turnover and the return on investment for solving it. If you are interested in a addressing your “profit leaks,” let’s schedule a time to further discuss your business and how we might work together to patch up your leaky bucket.
Howard Shore is an executive coach and founder of Activate Group Inc., based in Miami, Florida. His firm works with companies to deliver business coaching to improve executive leadership development. To learn more about executive leadership coaching through AGI, please contact Howard at 305.722.7213.
Profit Leak #1: Are You Losing Productivity on B and C Players?
Profit Leak #2: Is Poor Leadership Holding Your Company Back?
Profit Leak #3: Are You Too Focused on Tactics Rather Than Strategy?
Profit Leak #4: Are Vacant Positions Affecting Business Performance?
Profit Leak #5: Do You Have Retention Issues?
Profit Leak #6: Is Your Business Strategy Causing Lost Opportunities?
Profit Leak #7: Are Your Customer Attrition Rates Too High?
Profit Leak #8: Do You Know What Mistakes Are Costing Your Business?