The CPA Journal

Controlling the Costs of Mismanagement and Turnover

By Roxanne Emmerich

In interviews with two million employees at 700 companies, the Gallup Organization found that employees’ tenure and productivity at a company are closely related to their relationship with their immediate supervisor. “People join companies and leave managers,” said the primary analyst for the study. The following statistics quantify this statement:

According to the U.S. Department of Labor, Bureau of Labor Statistics, by the year 2006, the U.S. will face a shortage of 10 million workers. In addition, 55% of U.S. workers think often of quitting or actually plan to quit within a year.
A study by the American Management Association shows that filling a job opening takes an average of 41 to 51 days and that losing an employee generally costs 50% to 200% of the employee’s annual compensation.
According to the Harvard Management Update, 89% of managers are misguided in their belief that employees care only or primarily about monetary compensation.

Improving Managers, Improving Retention

To improve morale and retention without increasing staffing costs, some companies use “manager makeovers,” the purpose of which is to strengthen managers’ core people skills. The process achieves two crucial objectives:

It satisfies quality performers and builds loyalty and motivation.
It creates an employer reputation that attracts better employees.

“Change starts with holding managers at every level accountable and responsible for creating job satisfaction,” said Mark Holmes, author of The People Keeper: How Managers Can Attract, Motivate and Retain Better Employees. “Companies are finding that the quickest and most permanent change occurs when the whole company, top-down, commits to creating a positive workplace.”

Through better communication, ongoing education training, and integrating improved techniques into management style, companies are improving their managers’ people skills and franchisees’ profitability.

To stem turnover, ServiceMaster Clean, a national franchise of cleaning services, conducts quarterly training workshops for its managers and franchisees. To reinforce and internalize these management skills, they communicate and follow up through a company intranet and a biweekly newsletter containing articles, updates, and success stories. Franchisees also receive data to track and improve their progress against other operations in their region.

Internal efforts may be supplemented through outside help. Family-owned walnut producers Hammons Products Company, of Stockton, Mo., places managers in positive reinforcement how-to seminars led by outside trainers. Other companies, like Chick-fil-A, a quick-service restaurant chain, use outside speakers to deliver sessions on employee motivation and leadership and use consultants to help them implement internal programs.

Results

“Attraction and retention is our No. 1 corporate objective,” said Mark Conklin, internal consultant for Chick-fil-A. “We’ve found a strong correlation between sales, profits, and employee retention. We have also noticed a strong correlation between employee retention and customer satisfaction—happy employees mean the customer gets a better product.”

“Service companies must differentiate themselves from their competition by offering their employees more than just a job,” said Mark Vanase, ServiceMaster Clean market manager. “Turnover is a big issue, so the franchises that use these techniques get huge benefits in increased profitability.”

Hammons Products President Brian Hammons said that he has seen an increase in morale since his company started improving their managers’ people skills: “Our product quality has increased because employees at the production level point out more efficient work methods. We are getting better applicants and are being seen as a preferred employer in our region.”

By Roxanne Emmerich, president, Emmerich Group, Inc. (www.emmerichgroup.com). This article draws on material from The People Keeper: How Managers Can Attract, Motivate and Retain Better Employees, by Mark Holmes (Advance Mark Publishing, or www.thepeoplekeeper.com).

Editor:

Thomas W. Morris
The CPA Journal

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The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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