During the following blogs, we will discuss some often unknown or overlooked elements of employee turnover. Let us begin with “employee engagement.”

Engagement occurs when employees: (1) are fully present and physically committed, (2) are emotionally energized by forming meaningful connections to customers and colleagues, (3) believe their work has value, and (4) are cognitively focused on their task and their role in the work environment.

Engagement has been linked to customer satisfaction, employee retention, organizational productivity, and bottom line organizational profitability. Need any additional reasons to be concerned about how engaged your employees are?

According to a Gallup study, 26 percent of the U.S. working population is engaged (loyal and productive), 55 percent are not engaged (just putting in time), and 19 percent are actively disengaged (unhappy and spreading their discontent). Based on these figures, Career Systems International estimates that each employer is wasting approximately 10 percent of his or her payroll dollars on lost productivity due to that level of disengagement.

So, your employees may not be fully engaged in the work they do. While you may have seats in the chair, there may be no heart in the work.

You can easily spot the disengaged employee. This is the agent who makes little effort to identify or meet customer needs…the sales agent who volunteers no product substitute for “out of inventory” requests, the customer service rep who too quickly transfers to a special group when he could have easily handled the request, the night agent who tells customers to call back the next day even though she has been fully trained to open an account.

If this describes some of your agents, take heart. There are ways to foster engagement.

A company’s culture contributes greatly to engagement. Research shows that employee engagement is greatly enhanced when employees clearly understand the link between organizationally desired behaviors and rewards. Employee focus and customer focus are complementary. When employees recognize that the organization is focused on their well being, they in turn are more engaged and strive to meet the organization’s goals.

Affiliation with, and support from, team members also contributes to engagement. Research shows that increased cohesion between team members leads to greater commitment, motivation, engagement, and performance.

The orientation of new employees is a vital step towards improving employee engagement. Effective onboarding ensures that the employees are prepared for their jobs by facilitating their interaction with colleagues and making sure they know what is expected of them.

Finally, research indicates that challenging work promotes engagement. Challenging work must be supported by a clear job role description, clear performance expectations, plenty of feedback, and the opportunity to succeed (tools and development).

I know you are addressing many of these needs in your call center, but isn’t it nice to know that research supports your efforts?

It never fails. When you begin talking about employee issues (morale, retention, productivity, turnover, etc.), the topic of compensation is sure to come up. While money is not the cure-all, it can contribute to a reduction in turnover. A research study (Guthrie 2000) found:

1. As the use of skill- or knowledge-based pay systems is increased, turnover is decreased.
2. Extensive use of group-based incentive plans increases turnover rates. However, the negative effect of the group-based pay might be lessened if we distribute the group pay according to individual performance.
3. As the size of the group involved in group-incentive pay plans increases, so does turnover.

Whenever Response Design implements a performance management infrastructure in a call center, we find rewarding agents for improved performance is always a hot debate. While alternative pay structures won’t ever be the complete solution to reward and recognition, this research certainly gives good reason to include it!

Guthrie, James P., (2000) Alternative pay practices and employee turnover: An organization economics perspective, Group & Organization Management, Vol. 25, Iss.4; page 419, 21 pages

Are both employees and managers “on the same page” when they discuss employee retention? Some studies say, “Yes, the two groups are closely correlated.” Others say, “No, employees and managers are not aligned in their views on the factors that retain workers.”

Find the truth for your organization. And why is this important? If you act on leadership myths or isolated reports and research, you might aggravate the problem rather than solve it.

One of the most common myths is that money will cure all employee dissatisfaction. To illustrate, several study reports state that more than 75 percent of the managers queried thought their employees left organizations because of money issues (i.e., better compensation elsewhere). Managers often state, “Of course our employees want more money. If we give them an increase in hourly wage, then we can surely satisfy them. Let’s increase their bonuses as well and then we don’t have to worry at all about losing them.”

While research shows that low compensation is an important dissatisfier, you really don’t know whether it is true in your organization until you look at your current compensation structure and ask your employees. Money may not satisfy your employees; but if it is lacking, they will certainly be dissatisfied. The extent to which you should focus on money will depend on your situation. Is your pay scale competitive? Has the job role of the employee changed without commensurate change in compensation? If yes, then it is likely that you have an issue to correct.

If you intend to reward with cash, keep this in mind. According to the American Productivity & Quality Center in Houston and the American Compensation Association, it generally takes five to eight percent of an employee’s salary to change behavior. (If your reward isn’t cash, then budget about four percent.)

There is certainly no lack of advice on how to decrease employee turnover. However, implementing solutions without careful customization can be just as costly as the turnover itself. Most managers will tell you that they “know” what to do about employee turnover but, because of the wealth of retention strategies, they are less confident about knowing which strategy is right for their organization.

This caution is warranted. Any employee turnover strategy should be carefully considered before implementation. To determine if a strategy is right for you ask:
1. Is the strategy feasible within my particular organizational setting (e.g., does it align with your culture and values)?
2. Is there an adequate return on investment (ROI)? That is, when you project the savings on turnover and subtract the cost of implementing the solution, is there adequate ROI to convince leadership to proceed?
3. Will the specific strategy be effective in reducing the specific reason for turnover or negating the specific consequences of turnover (i.e., have you aligned the solution to the problem or are you using a “hopeful” shotgun approach)?

As I have said before, the most important place to start is understanding your turnover – the reasons for it, the negative consequences of it, and what it is costing your organization. Based on that knowledge your team can take a list of possible strategies and assess their feasibility. Because your turnover situation is unique, your solution must be unique as well.

In my research I found a lot of opinions, many case studies, a plethora of articles, and some significant research on ways to reduce employee turnover. If you want to confirm the volume of information, access the Internet and search “employee turnover.”

We know not every strategy is right for everyone and I was concerned about including strategies that weren’t backed up by valid research. Although I am a proponent of business practices being theoretically grounded, I feel, at this juncture, we could lose valuable options that could help us with our unique situation.

The following is a “top 50” list of options that you have—these are “possibilities.” Brainstorm with your leadership team to whittle down this long list into a short, prioritized, “right for me” list.

1. Include the appropriate skills and competencies in the job description
2. Use behavioral-based interviews to ensure candidates possess the attitudes, personality traits, and behaviors that ensure fit and promote commitment
3. Create a compensation policy (including pay tied to performance and variable pay) that supports the mission and culture of the organization
4. Market the call center internally to the rest of the organization
5. Implement career planning and development efforts that are tied to the organization’s business objectives
6. Base promotions on performance
7. Demonstrate commitment to the employee’s long-term development (job skills training and retraining - learning new skills for the present job and for redeployment); help employees take advantage of learning opportunities
8. Ensure that managers are skilled and effective coaches and facilitators
9. Implement training designed to change the myths of diversity; educate participants about the realities of diversity; and offer ways to respond to the challenges of valuing and managing diversity
10. Offer flexible schedule adjustments showing respect for an employee trying to balance work, career, education, and community (job sharing, flex time, telecommuting, full time to part time and back again)—and do it all without jeopardizing advancement opportunities
11. Conduct confidential exit interviews, and analyze and use the data collected in the interviews
12. Provide a work environment that is productive and respectful, with a feeling of inclusiveness; offer a friendly, appealing, welcoming setting
13. Provide challenging and creative work; design work that requires the use of multiple talents
14. Continually communicate the company mission, vision, and brand to employees; demonstrate how they contribute to each
15. Enhance employee engagement through team cohesion activities
16. Update your employee orientation to accurately reflect your expectations
17. Ensure that comprehensive change management is in place; include employees in change; eliminate abrupt changes
18. Provide tuition reimbursement
19. Provide competitive vacation and holiday benefits
20. Provide competitive pay
21. Provide holiday pay and / or bonuses
22. Improve your employee selection process
23. Customize an innovative reward program for functions and individuals
24. Evaluate the companies designated as “Great Places to Work.” These companies consistently experience a turnover rate that is half the national average; become an employer of choice.
25. Build increased commitment through fairness, care, and concern for employees
26. Provide an overall benefits package (health and dental insurance, stock options)
27. Train leaders in retention / engagement leadership competencies; hold leaders accountable for retention and engagement, using metrics to document impact of leaders
28. Collect input from team members regarding what it takes to retain and engage employees
29. Provide mentoring programs
30. Use technology to enable virtual teams and to make work more fun
31. Celebrate service anniversaries
32. Provide a 401K savings plan
33. Provide day care services
34. Provide sick pay
35. Distribute a company newsletter
36. Select an employee of the month
37. Allow employees to engage in community service
38. Match gifts to charities
39. Provide free / reserved parking
40. Establish recreational leagues
41. Open a company store
42. Provide exercise facilities
43. Provide a subsidized cafeteria
44. Provide a direct pay deposit option
45. Have holiday parties
46. Provide jury duty pay
47. Open a credit union
48. Hold a company picnic
49. Announce casual dress days
50. Create a process for internal job postings

We established in a previous blog entry that managers need to focus resources on managing the negative consequences of turnover.

As you calculate your cost of turnover, document the negative consequences you are experiencing in your organization. Perhaps your organizational objectives are in jeopardy or the “brain drain” is negatively affecting first contact resolution. You might be seeing a decrease in the quality of your service. Whatever the case, it is important to identify the consequences and design practical solutions for managing them.

In a 1984 article, Richard Mowday provides extensive practical advice on how companies can manage these consequences. His suggestions include hiring excess employees, utilizing part-time and captive labor pools, training current employees, changing work rules, increasing commitment in those who stay, automating, redesigning jobs, and performing continuous and long-term recruiting.

There isn’t a “one size fits all” solution. Call center teams must document the consequences they are experiencing and then brainstorm viable (i.e., possible and cost-effective) solutions. Let’s take a couple of examples and figure out how they might apply to the call center.

Consequence - Operational disruption: Contact center managers understand that one of the most serious consequences of high turnover is the inability to meet the customer experience goals. These day-to-day activities include meeting customer-dictated service levels and achieving first contact resolution.

Possible strategies: If turnover is causing these negative consequences, then the management team might want to consider expanding training and development programs. Current agents can improve their efficiency (and handle more customer contacts without compromising quality), new agents can be brought up to speed faster, and people can be cross-trained to allow greater flexibility in scheduling. The team could also look into part-time workers who can be scheduled on an “as needed” basis.

Consequence - Strategic opportunity costs: Many times when employees leave, a company loses valuable capacity to grow. Departing agents may have been the most skilled at converting a sale. Perhaps they were particularly knowledgeable concerning a certain customer segment or account. What if you lose the agent to whom all other agents refer their disgruntled customers?

Possible strategies: Again, training and development is a possible solution. Also, depending on the value of the lost opportunity, a company should consider hiring excess employees who are ready to join the team as the projected turnover decreases the ranks of qualified personnel.

Begin by analyzing your turnover. What is causing it? What consequences are you experiencing? Remember treatment without diagnosis is malpractice.

Secondly, address how you are going to reduce the turnover or negate the consequences. Brainstorm with your team. But remember, not all strategies are right for you. You may be asking, “What have others done to combat turnover?” or “How do I know the strategies that are right for my organization? Stay tuned – I’m tackling those topics soon.

Mowday, Richard T. Strategies for Adapting to High Rates of Employee Turnover. Human Resource Management. 1984; 23, 4; page 365.

The negative consequences of turnover are at least as costly as “employee replacement” expenses. If you are experiencing turnover, then it is probable that you are experiencing one or more of these negative consequences. Be sure to consider these when calculating the cost of losing employees.

Consider the cost of:

1. Operation lost productivity. The work a person is leaving must be covered. Someone else’s work may suffer because a co-worker is gone; deadlines (or service level) may be missed. Peer “discussion” about the vacancy may consume valuable time.
2. Supervisor lost productivity. Supervisors spend more time managing new employees (observation, feedback, etc.); therefore, they experience a decrease in their productive time.
3. New hire decreased productivity. Consider the amount of time it will take the new hire to reach the productivity level of the exiting employee. What is the cost of that lost productivity?
4. Lost customers. Losing valued customer service or sales employees can lead to decreased customer satisfaction and loyalty. Is it possible that employees might take customers with them? Will you find it necessary to take special precautions to keep customers that regularly dealt with the departing employee? Do you track this?
5. Lost sales. How many sales do you miss or lose because you have lost talented workers? What is the value of the missed opportunities?
6. Lost knowledge. Did the employee take valuable learnings with him? The contact center environment is conducive to tacit knowledge walking out the door.
7. Decreased customer service. Customer service can deteriorate when employees leave. What does this cost you?
8. Decreased employee morale. Morale can take a negative hit when good people leave. What does this cost you?
9. Lost profitability. Can you measure the cost of lost profitability for your department or the organization overall?
10. Increased mistakes. Can you quantify the cost of mistakes the new employee makes?
11. Project degradation. Was the departing employee involved in any projects that will now suffer? If so, what is that cost?

In my next blog, I’ll discuss how to approach managing these negative consequences.

What does it cost you every time you lose a valued employee? Have you considered all the factors (hard dollars, soft dollars, direct costs, indirect costs) you should include? If you haven’t, then it will be very difficult to assess which retention strategies will be profitable for you.

Following is a list of costs you may want to include in your calculation. Some of the items may not apply to your situation; you may not be able to define others. The goal is to realistically define your costs. If you don’t, you’ll never be able to plan a cost-effective solution.

The expenses associated with having to replace an employee may include:

1.The exit interview. Include the time of both the interviewer and interviewee. If a neutral third party conducts an exit interview (a practice that we recommend) consider the additional expense of hiring an impartial contractor.
2.Administrative costs associated with the person leaving; you’ll need to stop payroll and benefits, complete forms, etc.
3. Administrative costs to bring on a new person—adding to payroll, establishing and securing passwords, issuing ID cards, assigning e-mail accounts, etc.
4. The severance or continued benefits to the employee.
5. Costs associated with filling the vacant position temporarily, or the cost due to existing employees filling the void.
6. Employment advertising. Finding the right avenue can be tricky because most “Generation Xers” and “Yers” don’t read traditional paper-based newspapers; companies have to find new sources to attract employees.
7. Hiring costs (including call center management and HR). Include time to review and explain job requirements, review backgrounds, conduct interviews, discuss the assessments with others and select a finalist.
8. Internal posting. Calculate not only the cost of the internal recruiter, but also the time that the applicant is away from his or her job.
9. Drug screens, background checks, and reference checks. Calculate the cost per applicant and how many applicants are involved. Many companies screen the final three or four applicants.
10. Pre-employment testing to assess skills, abilities, aptitude, attitude, values and behavior.
11. Travel and/or relocation.
12. Orientation costs, including the time of the participant, the leader, and the materials.
13. Training costs including the development and delivery costs plus the salary of the new employee and trainer. Don’t forget the cost of the training materials—manuals, equipment, and technology such as computers.

The losses add up. Companies estimate that the loss of one customer service employee ranges from $10,000 to $20,000 on the low side to $50,000 to $75,000 on the high side. The loss is even greater for sales people (probably because it is easier to calculate a hard-dollar revenue loss). The estimated loss of a sales person ranges from $20,000 to more than $100,000 in lost revenue alone for a well-established account manager or broker.

Because contact center employee turnover is high and the costs of turnover continues to escalate, it behooves us to periodically re-evaluate the cost of this loss and make appropriate course corrections. However, don’t try to take your turnover to zero. Remember from a previous blog that not all turnover should be eliminated.

In my next blog, I’ll add to the list by accounting for the negative consequences that occur in the operation when someone leaves. In the meantime, you might want to start gathering your data.