Contributed Column

Personnel Points

by Dave Mount, Westaff

A look at employee turnover

In December, Fran and I went to the employee Christmas party hosted by my company. My wife and I have retired from active participation in company affairs but we are routinely included in many of the company activities — the annual planning meeting, the Christmas party and picnic, and meetings of the company advisory board, so we know what is going on but we are not involved day-to-day.

Our company has 13 offices and about 40 employees, not counting the temporary work-force, and all 40 are invited to the Christmas party.

Fran and I arrived on the early side and we were there to greet the new arrivals as they came into the room. I was very pleased and surprised that we knew almost all of the attendees. It has been two years since I have worked full time and it has been four years for Fran but we still knew nearly 90 percent of the people at the party. The reason? Low employee turnover.

At many of our planning meetings over the years, our managers and I would look at the turnover figures. Except for the year that this Great Recession started, our numbers have been considerably less than 10 percent. Some of our offices have had zero turnover for several years.

When Jack Welsh retired from GE in 2001, he wrote a book called Jack, which detailed his management philosophy and how he would remove the bottom 10 percent of employees every year. I suppose that will work in a company as big as GE, and we tried it — once. With 40 employees, it is not a viable proposition, especially if you follow my first precept and hire the best to begin with.

Some employee turnover is healthy. This is not about keeping the incompetent. Some turnover brings new ideas to management and that can be refreshing to the whole business. Also, if there is a really bad employee, the morale of the good ones suffers. But significant turnover in most businesses can be unhealthy. In a service business where some customers may come back year after year, turnover may be deadly. Sometimes our interaction with a service business is only annually, and having to break in a new employee each year is frustrating and time consuming and will lead to lost sales.

For example, I have used the same accounting firm since 1996 — even now, for a small company I have and for my personal tax returns. I have had the same accountant in that firm since the beginning. I don’t have to reinvent the wheel every year to get my taxes done. They have good notes on things from prior years, but more important, they have learned how I think about certain tax matters (and are not hesitant to correct me when that thinking is wrong).

I have some tips for reducing turnover. As always, these are not all-inclusive.

Hire carefully. We would typically interview a person for our company three times. One of the key interviews to me is to have all of the rest of our employees in a branch interview a person because they will be the people with daily interaction.

Check references. There are the obvious questions about work ethic, honesty, attendance, and integrity but you should also ask questions about personal relationships. Look for team players.

Pay well. I have written about this before but think here you get what you pay for.

Give the best benefits you can afford. When we started, we could only offer a little, but as time went on and the company became more profitable, we increased both the quality of benefits and the number of benefits we offered.

Encourage team building and also encourage your employees to get to know your customers.

Be family-friendly. Employees appreciate that and their appreciation leads to longevity.

One more thing. Employees thrive on success, and your success is just as important to them as their own. Fran and I were always careful about being overly ostentatious but we still needed our employees to know that we were successful. Our success breeds theirs.

Dave Mount is the founder of Westaff in Burlington.

Index of Contributed Columns

For information on submitting a contributed column see here.