| There are many articles and strategies about how to | | | | costs will the city incur to replace them? |
| improve employee retention and reduce the costs | | | | One study, reported by SHRM, the Society for |
| and consequences of employee turnover. | | | | Human Resource Management, stated it costs $3,500 |
| Taking a slightly different approach, this article is | | | | to replace one $8.00 per hour employee after all |
| about how not to increase employee turnover (and | | | | turnover costs have been calculated. (On this basis, if |
| lower performance!) based on a true situation | | | | 14 city employees leave, the city's $50,000 savings |
| recently occurring in the city of Syracuse, New York, | | | | will have evaporated). |
| a city I know well. | | | | 4. Downgraded desirability as an employer |
| In 2005, the city's mayor, running for re-election, | | | | The city's actions certainly don't encourage capable |
| signed a living wage law two months before the | | | | employees to consider it as a potential employer, |
| election, ensuring that employees of contractors and | | | | likely forcing it to spend more in recruiting costs, and |
| sub-contractors doing business with the city would | | | | getting more candidates rejected by other |
| earn an hourly wage placing them above the federal | | | | employers. |
| poverty level. | | | | Contrast these actions with what Lance, a Charlotte, |
| Under the new law, hourly wages of city-owned | | | | North Carolina, based maker of snack foods did |
| parking garage security personnel were raised from | | | | earlier this year after purchasing an Archway Cookie |
| $11.00 to $13.11. | | | | plant in Ohio that closed without warning. |
| Recently, with the mayor's approval, the city found a | | | | Lance gave all 300 of Archway's former employees a |
| way to place these employees under the auspices of | | | | debit card for $1,500 for expenses, and immediately |
| a state contract instead, allowing the city to lower | | | | hired back 60 employees, with plans to hire back |
| their wages back to $11.00 per hour. | | | | more as business improves. |
| The city's budget director estimates annual savings | | | | Do you think Lance will more than earn back its |
| of about $50,000. | | | | $450,000 investment in its employees in terms of |
| No doubt this money is important to a cash-strapped | | | | increased cooperation, quality, flexibility, and |
| city such as this one; however, I suggest this cost | | | | productivity? It's obviously betting it will, and I agree. |
| savings will be counter productive in the long run, | | | | Do you think the city of Syracuse is likely to lose |
| given four important consequences Syracuse is likely | | | | more than its contract-breaking savings of $50,000 in |
| to incur. | | | | lowered productivity and increased employee |
| 1. Encouraging employees to do as little as possible | | | | turnover costs? More than likely, yes; it's a short |
| Garage security personnel are now likely to decide to | | | | term savings with long term negative implications. |
| only do as much as they have to in order to keep | | | | Many employee retention practitioners promote quick |
| their jobs, and no more. Forget about going the extra | | | | retention strategies such as dress down days and |
| mile, or even the extra inch, in terms of doing jobs | | | | company picnics which employees appreciate, but |
| better to help garage patrons or city managers. | | | | which don't directly impact retention. |
| 2. Sending a negative message to other employees | | | | In my experience, the most effective employee |
| What might other employees think about how the | | | | retention strategies are almost always based on |
| city may attempt to deal with their compensation | | | | improving how an organization works with its |
| and contracts? Will it attempt to cut their wages, | | | | employees, and in building long term relationships with |
| too? What message does this send about the value | | | | them where communication and meeting mutual |
| the city places on its employees and the results they | | | | needs and expectations are key. |
| produce? | | | | Unfortunately, in this instance, Syracuse's efforts fail |
| Nothing positive. | | | | the test. (In fairness, in many ways, it's a great city |
| 3. Thousands of dollars more in employee turnover | | | | and area in which to live). |
| costs | | | | Be certain cost-savings strategies don't cost you |
| How many good city employees are likely to begin | | | | more in the long run by decreasing morale and |
| looking for other jobs if at all possible once the | | | | productivity and increasing employee turnover. |
| recession is over? And how many tens of thousands, | | | | © 2009 Ross Blake Associates, Inc. |
| or even hundreds of thousands of dollars, in turnover | | | | |