Survey says: Staff turnover is high
By Linda Segall

Turnover hurts business. It costs your practice money — through direct costs, indirect costs, and even hidden costs.

According to PeopleLink Consulting Inc. (www.peoplelinkconsulting.com), the total estimated costs of losing an employee range from 30 percent to 150 percent of the employee’s annual compensation.

What accounts for these expenses? Consider some of the direct costs:

• Severance pay. If you fire someone for other than a criminal act, severance pay is generally given — commonly two weeks pay in lieu of notice.

• Recruitment fees. These include advertising or payment to a recruiter.

• Pay for temporary workers or overtime pay. Someone has to do the work. If you hire a temp or work your staff more than 40 hours, you have additional expenses.

• Screening and pre-employment tests. Not all employers use these tests, but if you do, add the cost into your turnover costs.

• Training and orientation. Every new employee — even those with extensive experience — require training and orientation.

And the indirect costs? These include:

• Your time. And the time of anyone else involved in the interviewing process. The time you and your staff spend on interviewing candidates is time you don’t spend on other productive work.

• Lost knowledge. When a senior-level employee leaves your business, he or she takes away knowledge that is not easily replaced. 

• Lost productivity. Every new employee incurs a learning curve, which means new employees do not produce at their peak for several weeks to months, depending upon the skills and knowledge required of the job.

In addition to these direct and indirect costs are hidden costs. Consider:

• Unemployment taxes. In most cases, unemployment taxes are based in part on experience rates. High turnover may result in higher taxes.

• Lost patient loyalty. Patients expect to see the same individuals when they come into the office. They like to be recognized and called by name. Although you may not be able to put a dollar value on lost retention, this cost occurs.

• Lost billings. When a key individual, such as a billings clerk, leaves your practice, you may suffer from lost billings or follow through.

• Low morale. Whether turnover is caused by firing, layoff, or voluntary resignation, co-workers are affected, although you may not be able to make a strict accounting for these costs.

WHY DO EMPLOYEES LEAVE?

Employees leave involuntarily (laid off or fired) or voluntarily (quit).

Human-resources experts claim that very little involuntary turnover is caused by the economy. Instead, most involuntary terminations are caused by excessive absenteeism, “bad fit” (including lack of skills, “attitude” problems, or failure to get along with others), or disregard for work rules.

With insight, most employers who have fired staff admit they made a mistake and should have never hired the person in the first place.

It’s voluntary turnover — employees choosing to leave on their own volition — that stymies many employers. Why, they wonder, do good workers quit?

According to a recent report by the American Business Collaboration (ABC), which is managed by WFD Consulting (www.wfd.com), employees leave their employers when they no longer get satisfaction from their jobs.

ABC’s report, “The New Career Paradigm,” looked at job satisfaction (and dissatisfaction) from the vantage of gender, age, and exempt/nonexempt status. In all cases, compensation (wages and benefits) had to be “right” for people to feel satisfied: If employees feel they are not paid fairly, they leave.

The report also said although employees make job decisions based on compensation and benefits, they also take work/life balance and opportunities to learn and grow into high consideration. Having meaningful work scored high in most categories of gender, age, and exempt status.

YOUR PROBLEM?

Is turnover a problem for chiropractors? Chiropractic Economics asked readers in an e-mail survey to answer a few questions about their turnover and employee-relations policies.

The survey discovered that turnover is a problem. Consider some of the statistics we gleaned from the answers of 345 respondents, who have been in practice for an average of 15.7 years:

• High number of quits. Almost half of respondents (48.0 percent) said the reason they hired their last employee was because of voluntary resignation. The top reason for quitting, according to respondents, was better compensation (35.1 percent), followed by better benefits (30.2 percent). About one-fifth (21.4 percent) said they lost employees for advancement reasons.

Interestingly, despite these compensation-related reasons for leaving, the overwhelming majority (81.4 percent) of respondents truly believe they provide competitive pay. Less than one-third (32.8 percent) provide healthcare benefits, and even fewer (21.7 percent) offer a retirement program.

• One-fourth fired. The reason why almost one-fourth (23.2 percent) of respondents hired their last employee was to replace someone they fired. Other reasons why they hired their last employee: Added staff (24.4 percent) and replaced someone because of death or retirement (4.4 percent).

• ‘Young’ and ‘old’ staff. More than half (52.9 percent) of respondents said their least-senior person had been with them only six months or less. At the same time, 65.5 percent said their most-senior employee had been with them for 24 months or more.

SOLUTIONS

Although some turnover is inevitable and even desirable, excessive turnover can be managed. PeopleLink Consulting suggests three general action steps:

1. Recruit smarter. Make sure employees “fit” your practice. When you have a job opening, understand the scope of the position you are filling and what it takes to be successful in it. Make sure the person you hire has the necessary skills, knowledge, and abilities.

But even more important, make sure they share the same philosophies, values, and outlook as you do and can get along with co-workers.

2. Implement written employment policies. Make policies fair and enforce them consistently. Write an employee manual and give each employee a copy. Companies lose people because of a perception of inconsistent or unfair treatment.

3. Pay fairly. Employees perceive “fair pay” as a total compensation system (pay and benefits) that has internal equity (people in the same job are paid within the same pay range, allowing for seniority) and external competitiveness.

Examine what you are paying your employees to make sure you aren’t favoring some more than others. And check the market to make sure your pay is competitive.

Linda Segall is editor-in-chief of Chiropractic Economics magazine. She can be reached by e-mail at lsegall@chiroeco.com.