3 Questions about Turnover Rates

The Kansas factor in marketing Turnover RatesI have a friend/client from Kansas.

At least once every time we’re putting together numbers for one of his customers he’ll say “Figures lie and liars figure”.

That Midwest wisdom points out figures (numbers, facts) can tell many different stories.

You choose what you want them to say – then find a figure, or calculation, that gives you that story.

The “Kansas” factor in marketing Turnover Rates

First, the “Kansas” factor refers to honest communication – not comparing the state to how contractors market.

With that out of the way – don’t all service contractors’ brag about their turnover rate?

I don’t know of one that says their turnover is HIGHER than the industry average. That poor industry average is held up for ridicule at 100% to 300%.

If everyone is lower than the average, how come the industry average is so high? Who’s raising it?

Customers would love to have one turnover rate that all service contractors use. They could then compare turnover across contractors and services (i.e. among janitorial, security, engineering, etc.).

But if you’ve bought or sold services for more than 20 minutes you’ll recognize there are a few critical questions surrounding “turnover rates”. Here are mine.

#1 – Is there a universally accepted turnover rate?

There doesn’t appear to be one for the facility service industry.

The one that may have the best chance for being universally accepted is from the U.S. Department of Labor’s Bureau of Labor Statistics (BLS).

It defines Turnover Rate as:

“…the number of total separations for the year divided by average monthly employment for the year (annual turnover).”

You’ll need to multiply this number by 100 to get a percentage. And note that “separations” contains voluntary quits and involuntary separations (contractor terminations), but not layoffs. That makes sense.

#2 – Does that turnover calculation smell funny?

There’s a problem with the BLS formula above.

It doesn’t take into account the stability of other positions.

EXAMPLE:

  • Hypothetical XYZ company has only 3 full-time positions
  • 2 of those positions are staffed with 10-year employees, no problem here
  • The 3rd position has gone through 10 different people in a year
  • At year end, the 11th employee has managed to hang on to the job

What’s the turnover rate?

Is it 333%, using the BLS formula listed above?

Or, is it 33%, because only 1 of the 3 positions turned over?

#3 – Is all turnover bad?

Think about the bad egg who has got to go. Or an employee isn’t the right fit for the industry -or has work expectations that don’t match the contractor or customer.

These are involuntary separations. And they count towards contractors’ turnover rate.

Should high turnover rates because of involuntary separation reflect poorly on contractors?

Also, consider this. For customers in economically-challenged markets, high contractor turnover may be necessary, though not desirable. It’s done by losing the higher paid employees.

It keeps costs flat year-on-year. But it also brings service issues related. New contractor employees must learn the facility and can bring more headaches for customers and end-users.

How do you market turnover?

~~~~~~
Chris Arlen
President, Service Performance

Technorati: employee turnover, labor turnover, turnover

Questions or Ideas?

Send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt