Tuesday, August 27, 2019

Employee Turnover Essay Example | Topics and Well Written Essays - 2750 words

Employee Turnover - Essay Example Galvin (2004) asserts that turnover is "a modern business dilemma that is costing companies billions of dollars annually, yet surprisingly little is done about it." For businesses seeking to optimize their bottom line, particularly in the retail industry, getting this problem under control can translate into dramatic improvement in profitability and competitiveness. Understanding the particular costs of turnover to each business is an essential first step in determining the extent to which it is even a problem that needs to be addressed, and if so what is the appropriate approach to addressing the problem. This paper examines the reasons for higher rates of turnover in retail generally as compared to many other industries. It goes on to propose solutions and strategies retailers can adopt to decrease employee turnover and improve their bottom line. The direct costs of turnover are easy to quantify, according to Galvin. These are recruitment expenses such as classified ads and headhunter fees, training expenses, "travel or relocation expenses, interviewing, overtime for employees who take on departing employees' tasks, and all the related administrative functions that go into the grand exit and entrance." These costs are merely the "tip of the iceberg," however, as there are numerous indirect costs that are often not even considered. These include lost business from unhappy customers who are driven away by compromised service quantity and quality, resulting in lost business. Also, there is usually some lost productivity resulting from the need for other employees to pick up the slack in addition to their own jobs. Finally, the diversion of management attention from strategic planning to devising ways to make up the shortfall left by departing workers yields an opportunity cost for the business (Galvin, 2004). What strategic and competitive strides could have been made had management not been preoccupied with filling gaps from employee turnover An additional indirect cost of turnover in a retail environment is missed sales due to inexperience of new staff or due to the lack of adequate available staff to take care of all customers efficiently. Kal Lifson (1996) asserts that an "inexperienced sales associate loses 10% of the sales dollars that a veteran associate would have made." That is an enormous impact that is often not even accounted for by companies concerned with the financial impact of turnover. "Turnover takes a huge bite from the bottom line. Large merchants spend an average of $77 million a year in severance and other departure related costs, and lose another $161 million in potential revenue due to such factors as new employee mistakes," maintains Leigh Dyer (2002). The story on turnover is not all bad. Businesses arguably need some fresh blood in order to remain dynamic. New people bring fresh ideas and approaches to the business. Companies with zero turnover risk being stagnant and stodgy in a very competitive industry that is largely based on a clientele attracted to the young, the hip and the trendy. "New employees do bring in new ideas and keep the organization fresh and current" (Zografos, 2006). In addition, some level of turnover helps businesses to understand the driving factors behind employee retention, enabling them to respond more effectively when the inevitable departure does take place. Low-turnover businesses can "focus on why employees

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