"What is Turnover Costing Your Organization?" 

 

 

A leading industry analyst and consulting firm recently conducted a survey aimed at identifying the cost of turnover within the broad spectrum of the hospitality industry.  This survey was extremely comprehensive.  While it found that each segment of the industry has its own, somewhat unique turnover criteria the survey found that all segments suffer from a puzzling lack of a “true understanding” of the root cause(s) of this industry plague.  Further it identified an extreme lack of commitment to correcting the problem through proper management techniques and discipline.

 

“Organizations surveyed with five or more facilities, each with one general manager, three assistant managers, twelve skilled and forty non-skilled hourly employees experience a minimum of 30% management turn over and one hundred percent hourly turn over annually”

 

Issues researched in the survey:

 

- Annual turnover ratios

  ü  Per job category

  ü  By industry segment

  ü  By cause

  ü  Measured by seniority criteria

  ü  Evaluated through payroll data

  ü  Evaluated and weighted against the availability and/or lack there of aggressive training and career development opportunities

 

- Cost criteria

  ü  Expenses related to exiting employee i.e. prorating vacation pay, special check runs, duplication of benefits paid for the new employee etc. (redundant expense)

  ü  Loss of established customers and/or fellow employee (familiarity and trust)

  ü  Loss of interest and attention to detail (thus cost & service controls) on the part of both the new and exiting employee etc.

  ü  Recruiting redundancies:

      §  Hourly

      §  Skilled hourly

      §  Management

      §  Support staff

      §  Advertising

  ü  Interview time and material

  ü  Administrative.  Human resources, payroll and supervision redundancies

  ü  Initial get acquainted time (generally conducted by more than one fellow employee and/or supervisor

  ü  Initial training (all costs considered

  ü  Additional time needed for scheduling as well as additional hours required

  ü  Quite often over time is involved

  ü  Loss of productivity

  ü  Potential loss of dissatisfied guests

  ü  Higher than average waste (in food, supplies and other cost areas)

  ü  Higher than usual cash shortages

  ü  Side work slips.  Extra hours need to correct the problem(s)

  ü  On-going, additional management/supervision time required for follow up training and counseling (and often mediating differences)

  ü  Statistically, one in ten new hires is terminated for cause within their first ninety to one hundred and twenty days. Because of this the above costs will be repeated (doubled) for ten percent of all new hires

 

It is easy to understand why major employers who consistently track these costs tell us that the true cost for each new employee hired, as the result of turn over, is in excess of one thousand dollars for (blended) hourly staff and five thousand dollars for entry and second level management positions.  Organizations surveyed with five or more facilities, each with one general manager, three assistant managers twelve skilled and forty, non-skilled, hourly employees experience a minimum of 30% management turn over and one hundred percent hourly turn over annually.  Turnover cost each of these facilities fifty-one thousand dollars annually. 

 

A leading industry analyst and consulting firm conducted a survey aimed at identifying the cost of turnover within the broad spectrum of the hospitality industry.  This survey was extremely comprehensive.  While it found that each segment of the industry has its own, somewhat unique turnover criteria the survey found that all segments suffer from a puzzling lack of a true understanding of the root cause of this industry plague.  Further it identified an extreme lack of commitment to correcting the problem through proper management techniques and discipline.

 

If you are seeking professional assistance, please see our web page at Marshall & Associates - e-mail us at marsconsul@aol.com or by using the no obligation contact form 

 

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