According to the research, turnover rates ranged from 31% annually in call centers to 123% in fast food.
"Employee turnover is draining profitability from companies in many industries," said Jude Rich, chairman of Sibson & Company, a subsidiary of Nextera Enterprises that conducted the study. "By reducing turnover, the opportunity to improve a company's stock price can be substantial, but many companies have not declared an all-out war against turnover. We believe that there are several reasons for this: many managers do not know how much turnover really costs; others have not figured out the root causes, so they do not know what actions to take; while others mistakenly believe turnover is inevitable in their industry."
Sounds a lot like what I've heard at truck driver retention seminars.
According to Sibson, the direct costs of replacing employees is just the tip of the iceberg. Employee turnover also may inhibit company's abilities to keep current customers, acquire new ones, increase productivity and quality, and pursue growth opportunities.
Jim Kochanski, head of Sibson's talent management practice, points out that a key to successful retention efforts is estimating the return on turnover reduction investments. "Many companies are under-investing in turnover reduction because they don't have the information they need to calculate the ROI," he said.
Kochanski noted that managers must then implement creative solutions in areas that matter to employees. "We have seen some very creative solutions," he said. "Turnover reduction solutions vary by industry and client."
Solutions can include changing an employee's job, increasing an employee's affiliation to the company, or increasing compensation.
UPS, for instance, found that drivers left because they found loading their trucks too exhausting. UPS pushed the loading task downstream to dock workers, and driver turnover decreased significantly. Although turnover increased in the dock workers, UPS' overall cost of turnover decreased because driver turnover has more impact on customer retention and is more costly to replace.
Although some managers accept turnover as a given, Sibson found that this is rarely the case. "Our data and experience indicate that reducing turnover by as much as 50% is realistic for many companies, even if some managers don't believe it can be accomplished," said Kochanski. "The companies with the lowest turnover rates in an industry often have turnover rates that are two to four times better than the worst performers."