A New Twist on the Cost of Turnover

We featured in a previous entry a very effective model for costing employee turnover, although every model will have holes and omit important considerations. Here’s one great example.
We recently began work with a hospital to cut their turnover and the CEO there was immediately open about why he hired us. He told us he had signed a contract to bring in a noted consulting company to increase efficiencies by shaving times off of waiting periods, surgeries, and the like…and he knew that improving efficiencies included improving individuals’ job performances. So logically he said “Why would I want to spend all of that money to make my people better and then not do everything I can to keep them?”

So let’s take this logic a step further and ask: Should you be concerned about turnover if your people don’t perform well? I guess the answer is no, and also that your problems are far bigger than employee retention. But the logical counter-question is about how important is it to retain employees if you’ve heavily invested in them, as this hospital has. The CEO’s position was that the more he improved efficiencies, the more he increased the cost of new-hire training to ensure new hires fully understood and followed the shiny new processes. Therefore, the cost of turnover had just gone up.