Customer Contact Center Network Meeting

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Benchmarking Event
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Agenda

• Employee Turnover Foundation
• Presentation of a Turnover Model
• Panel Discussion
• Q A
• Update on C3N Educational Programs

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How Much Does YOUR Employee Turnover Cost?Based
on the works ofWayne Cascio, William H.
Pinkovitz, Joseph Moskal and Gary Green

• Presented By
• Parminder K. Jassal
• PJassal_at_GreaterLouisville.com
• 502-625-0161

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Goal

• Unveil True cost of employee turnover
• Causes
• Costs
• Consequences
• Demonstrate to the business community the
  value of ROE -- Return on Employee

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Objectives

• Define turnover
• Reveal and understand the hidden costs of
  turnover
• Practical example
• Offer resources to help design effective
  recruitment and retention strategies

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Turnover Defined

• Employee turnover is a ratio of the number of
  workers that had to be replaced in a given time
  period to the average number of workers
• of workers that have to be replaced
• Compared to the average of workers
• In a given time period.

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Voluntary vs. Involuntary T/O

• Voluntary It occurs when an employee leaves the
  organization out of his own choice and can be
  caused by various elements. These may include
  poor job feedback, job dissatisfaction,
  performance problems and lack of career
  advancements.
• Involuntary It occurs when an employee is
  discharged or terminated.

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Why is There Turnover?

• Turnover 38 to 75
• Manager Driven
• Controllable
• includes poor hiring decisions.
• also includes managerial effectiveness and
  performance management
• Bad hiring/Bad treatment.

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www.AdvantageHiring.com
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Computing the Turnover Rate

• Divide the number of employees who have
  permanently left the organization, by the total
  number of work force.
• Turnover rate number of employees who left the
  organization                        total
  number of employees in the organization
• If this count is taken in the middle of the
  month, the company can calculate the monthly
  turnover of employees
• For instance on 15th of January, if the total
  number of employees in the organization are 200
  and if by then 20 employees have left the
  organization, the companys monthly turnover rate
  will be
• 20/200 10
• To calculate an annual rate, take the monthly
  rate
• 10 divided by .0833 (1/12 of year) 120 YTD

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What is Avoidable Turnover?

• The next step is to calculate the turnover rate
  for avoidable reasons. This method represents
  that part of the employee turnover where the
  management has control over the turnover rate.
  Some of the reasons for which the management has
  no control are
• Illness
• Pregnancy
• Marriage
• Relocation of spouse
• Any other reason apart from those above, can be
  avoided by the company.

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Avoidable Turnover Rate

• total no. of employees leaving due to
  unavoidable reasons
• total number of employees in the middle of the
  month 20-6 14 employees             200
  employees 7 monthly turnover rate.
• This means 3 (10 - 7 avoidable turnover) of
  the 20 employees could have been working with the
  company if the company proactively took some
  action against these reasons. 

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Call Center Turnover Rates

• "Inbound centers have an average annual turnover
  of 26 for full-time reps, and 33 for
  part-timers. Nearly half of centers said that
  part-timers handle 5 or less of their total
  calls.
• 1999 Call Center Benchmark Report, Purdue
  University Center for Customer Driven Quality.
  Call Center News

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Average Turnover Rates?

• Typical industry turnover rates are 15 - 30
  percent. Some common causes of turnovers can be
  the pace of effort required, sense of
  powerlessness, frustration, repetition, daily
  physical confinement and the feeling of being
  spied on.
• 2005 Society Of Consumer Affairs Professionals In
  Business

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Turnover Checklist Status Check

• Do you measure turnover rate is it a strategic
  initiative?
• Do you distinguish between avoidable and
  unavoidable turnover?
• Does your measure include the hidden cost
  factors?
• Do your executives expect/receive regular updates
  on turnover?
• Do you have an effective recruiting strategy?
• Does your company have a documented retention
  strategy that is part of the business plan?

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Cost Factors

• Exit/Termination
• Vacancy
• Replacement/Hire
• Training/Education
• Hire costs
• Performance Differential New employee costs
  (13.5 months to achieve the productivity of a
  mature, accomplished performer -- on average)
• Ripple effect (hidden costs)

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General Turnover Cost

• For a manager or professional, the estimated
  replacement cost is 1.5x the annual salary
• For a frontline person, the estimated cost is 25
  to 75 of the annual salary
• 80 of the cost is hidden

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Hidden Costs

• Poor Customer Service
• Poor Quality/Workmanship
• Low Morale
• High Absenteeism
• Poor Group Cohesiveness
• Learning Curve
• Mismanagement -Loss of Focus/Attention

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Turnover Cost Example

• Excel Spreadsheet
• An electronic copy of this spreadsheet is
  available
• email me and request
• Online turnover calculator at
• www.uwex.edu/ces/cced/publicat/turn.html

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KEi's Employee Retention Wheel
http//www.keepemployees.com/retention
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Retention Checklist

• Employee empowerment
• Tuition reimbursement
• Improved training programs
• Improved benefits
• Careful selection and hiring
• Improved orientation
• Exit interviews
• Health insurance
• Profit sharing
• Retention bonuses
• Recognition programs

• Flexible work schedule
• Daycare facilities
• Provide personal services
• Flexible work arrangements (work-at-home)
• Established, well-defined career paths
• Mentoring programs
• Employee Stock Option Plan
• Exercise facilities or health club memberships
• Casual dress code

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Key Point

• Does your company market its retention programs
  to employees to further distinguish it as the
  employer of choice?

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Summary

• Turnover is expensive -- more expensive than most
  realize
• US DOL estimates it to be 30 of the departing
  employees annual wage, including benefits
• Dealing with it is a non-value adding activity
• The goal is to redirect wasted turnover cost into
  better recruiting practices and more effective
  retention strategies.

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Labor Market Information Sites

• Kentucky State Data Center
• http//ksdc.louisville.edu/
• Kentucky Cabinet for Workforce Developmenthttp//
  www.state.ky.us/agencies/wforce/index.htm
• Kentucky Cabinet for Economic Developmenthttp//w
  ww.thinkkentucky.com/
• Bluegrass State Skills Corporationhttp//www.thin
  kkentucky.com/bssc
• The Kentucky Information Pagehttp//www.louisvill
  e.edu/easchn01//
• The Louisville Economic Monitorhttp//monitor.cbp
  a.louisville.edu/
• Bureau of Labor Statisticshttp//stats.bls.gov/jl
  t/home.htm

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How Much Does YOUR Employee Turnover Cost?

• Parminder K. Jassal
• PJassal_at_GreaterLouisville.com
• [phone]