See Beyond the Background Check

Employers - Does turnover really matter?

There are two things to consider when deciding if employee retention is high priority:
1) Is the cost of hiring and training lower than the costs associated with advancing and retaining employees?
2) Does client retention depend on their ability to interact with the same employee on a consistent basis?

If client retention is not dependent on which point of contact is delivering the product or service you're offering, turnover is not a bad thing. However, if the cost of finding and training employees to do the job is high, you could be dipping into capital reserves unnecessarily. It's possible that finding a way to keep the people you already have would be a more thrifty approach to your business model.

For example, you don't care who takes your order at McDonalds. You don't even see who assembles your burger. It drives you nuts when they neglect to give you that extra dollar menu item you ordered. But you keep going anyway because it's cheap and it tastes good. That's right, McDonalds' client retention and volume of consumption are directly tied to 1) Pricing of the product and 2) consistency of the product (they think adding "healthy" items to their menu will bolster sales, but they're wrong. McDonald's is a guilty pleasure - they should just be who they are). Since training is cheap and client loyalty isn't tied to whose voice blares over the drive through speaker, turnover really isn't an issue. McDonalds just needs to develop delicious products at a low price. If they want to increase their profit margin they'll do all they can to keep the cost of labor, hiring and training low. To solve the case of the missing sandwiches, they might think they need to pay more, which would incentivize more detail oriented people to apply. Higher wages would also motivate employees to tolerate higher levels of scrutiny, thereby reducing turnover of the folks who get the orders right. But placing a scale at the drive thru window that weighs the contents of the bag against what the order is would probably be a more cost effective way to get more orders right. If the weight is deficient an alarm could sound letting the employee know that something is probably missing from the order. Conversely, they'd eliminate waste by catching bags that weigh too much. McDonalds would save money with a model that offers low wages, targeting high school kids or college students with the expectation that they'll be hiring and training a lot.

A 5 star restaurant serving upper echelon clientele, with a lunch ticket averaging around $50 per person would probably employ a different model. A C-level executive would grow accustomed to sitting at her favorite table, with her favorite server who can put her drink order in before she's even placed a napkin on her lap. This would help increase retention in a very competitive industry. Retention would also be important in a cleaning company. Because the client is inviting the service provider into their home every other week, not only do they want to consume the service on the basis of trust (especially with the cleaning industry's notorious penchant for theft), but they want the person doing the work to know and tend to their specific needs. These businesses need to find a way to keep their best people for the long haul or risk losing clients as a result.

Figuring out which model makes the most sense for you is as simple as listening to your clientele and evaluating the cost of hiring and training. After you know if high turnover really matters, you can start to figure out HOW to retain your employees. (Hint - you'll want to evaluate yourself to make sure you aren't the toxic one.)