I hear it all the time from companies that require a large number of hourly workers to do business. Their turnover is so high, they tell me, that they’re happy – well, not happy, really, but willing – to hire any “warm body.”
But that’s a big mistake.
The temptation is great, I know. You have shifts to fill, lots of them, and you’re dealing with huge turnover. Employees, many of them young, will often quit with little or no notice – or get themselves fired because they don’t show up for work. Some degree of turnover is inescapable (and indeed healthy) in any business. But many executives in the hourly wage industry believe that massive turnover is simply a fact or life, so their only recourse is to keep hiring anyone with a pulse.
This thinking is understandable, but it’s based on a faulty premise – and it’s enormously costly.
Hiring warm bodies may help you plug immediate holes. But not for long. On the contrary, such indiscriminate recruiting creates a vicious cycle that drives performance down and turnover up. In other words, this “solution” to the turnover problem is actually one of its causes.
The Price Tag of Turnover
It is not uncommon for companies with large numbers of hourly wage workers to experience annual turnover of 150 percent or more. Think about that for a moment.
Let’s say you’re in charge of a retail chain that needs, say, 1,000 employees to keep the doors open, the stores stocked, and customers served. To maintain that full complement of workers, you must identify, interview, hire, and train 1,500 new employees every single year if you’re churning at 150 percent. The price tag for this kind of constant recruitment is huge.
Researchers have done a great deal of work trying to quantify the cost of replacing employees. Estimates vary, but in one report, experts aggregated 30 separate case studies from 11 research papers. They found that it costs businesses about one-fifth of a worker’s salary to replace that worker. Following is what the underlying investigations revealed about the cost of replacing some specific job types:
Grocery store cashier: $2,286 to $4,313
gift-shop clerk: $3,383
hotel room-service wait staff: $1,332
home care aide: $3,362
So, a grocery store chain with 1,000 hourly wage employees and a 150 percent turnover rate will spend more than $3 million annually on replacing staff. And that’s at the low end of the range.
An expert in the field, Josh Bersin, a principal at Deloitte Consulting and founder of Bersin by Deloitte, enumerates the following contributors to these costs:
Advertising the position
Lost productivity (trained and experienced workers are more productive than novices)
Lost engagement (employees left behind can become dispirited by constant defections)
Exit the Hamster Wheel
If you enjoy the recruitment hamster wheel (hire, fire/quit, repeat), you’re obviously free to keep running – and paying.
For the rest of you, the best way to slash your turnover rate is to hire better in the first place. The idea is to stop settling and start targeting. Not every warm body is alike. You need people who better align with your company and the roles you need them to fulfill. Better personality alignment should result in longer, more productive relationships.
By making a customized, mobile personality assessment a part of your recruitment process, you can get to this invaluable information quickly, reliably, and in a way that generates a positive return on investment.
Of course, high-volume employers need a lot of candidates to choose from – and most personality assessments require candidates to answer hundreds of questions, often on clunky web portals accessible only from a desktop or laptop. That depresses completion rates and, thus, candidate pools. That’s why the best assessment solutions are mobile-friendly and deliver high completion rates.
Given the diverse needs of different companies, it is impossible to provide a comprehensive list of both personality types and traits you should seek and those you should avoid. Instead, you’ll want a personality assessment to fit your particular requirements. That said, you should always be after these three traits when hiring hourly workers: honesty, credibility, and reliability. It’s possible to score your applicants on these and other traits and deliver the results to your managers.
Speaking of managers – in the kinds of workplaces we’re talking about in this post – often they are not very far removed, in terms of experience, from the hourly wage workers under their supervision. They are the ones who must fill those open shifts; they hire warm bodies to fill them because they simply don’t know what else to do. Yet once they’re acquainted with the power of a good personality assessment solution to guide their hiring decisions, they rarely resist.
Just as airplane pilots learn that it’s safer to rely on the gauges than their own eyes, your managers will quickly discover that trusting easy-to-understand data over their gut instincts is a much better way to find reliable employees.
No company is ever going to eliminate the turnover of hourly wage employees entirely. Take college students, for instance; in all likelihood, they’re leaving to return to school or to pursue a different career at some point in the not-too-distant future. That’s okay.
But companies that can significantly cut down the churn can save considerable sums and improve operations.
For more ideas on keeping your best employees around longer, check out our free guide, 6 Ways to Reduce Turnover. Then request a demonstration of our solution to see how simple it is to gain the insights necessary to hire the employees likely to stick around.