Turnover and Company Culture

Marilyn SanfordsmartPRENEUR Blog Series

The Cost of Turnover

I’ve heard horror stories about the cost of turnover in firms, especially smaller firms.   It may be one of the least understood and costly aspects of running a small labor dependent business.   Estimates have ranged from a month’s salary to a year’s salary.   I’m not referring to payouts, I’m referring to the internal impact on the business.  

Culture is Living

Especially in our Industry, the techs can easily create their own culture.   How they view the firm, its value and its ‘apparent’ culture is worth paying attention to.  Culture is directly connected to loyalty.   Internal practices that engage, are inclusive, and seek input while ensuring clear communications are on the right path.  Like so many aspects of well-run businesses, culture is expressed, and is managed through stakeholder engagement.  Culture is living not static.  

Turnover

Turnover can be a warning that something is not working well in the business.  Unless it is well managed which includes transparent and inclusive practices, it can become problematic and endemic.  Never assume.  Always seek insights and understanding.  We’ve all heard it before; turnover is rarely about pay.   

This quote, from an HR software firm, BambooHR, resonated for me.

“People are the key to workplace excellence. If you give HR the knowledge and time to work with people, they can build the kind of culture, policies, and practices that set entire organizations free to be better at what they do. And when you give employees the power to help themselves, they feel more valued and capable as contributors rather than simple assets.” 

Employee Engagement

Ours is a people dependent business.  Labor practices are at the heart of effective management.   People want to be appreciated.   This is multi-faceted because if I am involved in work that I am not suited to, or that I’m not trained for or that is frustrated by poor systems and internal communications, I am handicapped.  An inclusive culture is key to employee engagement.   Part of this is creating the systems that ensure the right person is in the right position, doing the right work.  It can also be at the heart of low turnover.

Every time an employee leaves, the team is impacted.  This impact can be good, if the person leaving has been fairly treated and leaves for good reason.   If hiring is well done and good practices are in place, it is unlikely an issue of unfair treatment and it may likely not be a surprise.   Bringing a new employee in that is not a cultural or technical fit is costly.  Involving other team members in the hiring process, ensuring a trial period that gives both the team and the new hire the opportunity to effectively assess their fit, and firm’s culture, can be very effective.

A 2015 Article written by Gallop includes the following findings that impact employee retention:

  • Managers account for up to 70% of variance in engagement
  • Consistent communication is connected to higher engagement
  • Managers must help employees develop through their strengths

Though you can expect turnover, work to ensure employee participation and cultural effectiveness.   After better understanding the importance of culture in managing turnover, we made significant changes to our hiring systems: 

When Hiring

  • Institute a testing process to determine more about the incumbent and help assess their fit.   It was also a very insightful tool for the new hire, when the results are shared with them.
  • Include the primary team and direct supervisor in the hiring process
  • Give the prospect insights into how the business is run, where they are expected to fit  
  • Review and update your hiring process prior to each hire. This should include two-way insights, because your culture and their fit are important to both their assessment of fit as well as ours.
  • Discipline commitment to annual employee reviews, using an express and iterative review process.  It’s best to implement this quarterly, if possible, to ensure timely communications to help deal with any issues that arose throughout the year.

Iterate and Improve

Team engagement, hiring, communications and open culture are important to low turnover.  By ensuring that standards are high, consistently practiced and that feedback is immediate, will minimize turnover.  In our case, while not perfect, we saw marked improvement when we added a line level supervisor, ensured daily and weekly huddles, included the team in meaningful decisions and prioritized engagement across all levels.

About the Author

Marilyn Sanford

Marilyn is a Professional Accountant. She spent 23 years running trade based businesses, offering Low Voltage Custom Integration solutions to demanding and discriminating customers for high end residences and businesses. She has served on boards, taught in her Industry and is a Fellow of the Custom Electronic Design and Installation Association (CEDIA). Marilyn Co—founded Smart fx in 1992, merged with La Scala in 2000 and later acquired LaScaIa in 2007. Over the years running a custom installation business, she learned what it takes to run a profitable business dependent on construction timelines. These insights and lessons learned, delivering ‘skilled labour’ as a primary service offering, were the seeds that grew the LincEdge concept.

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