Benefits and Compensation

Talking Turnover with Top Management

Start with this simple distribution chart, says Ahlrichs, who is owner of ExpertSpeaks, and a consultant and business developer for Gregory & Appel.

Distribution of Producers

Which ones do you really want to keep? If we agree that we want to keep the top 16%, says Ahlrich, then we need to address turnover. That means talking to the C-suite, and particularly the CFO.

Here’s how to talk to talk with the CFO and your managers, says Ahlrich.

  1. Direct attention to the distribution chart.
  2. Note that 60 percent of output of any department comes from the top 16% people.
  3. Then note that an additional 60 percent of output comes from the 68% in the middle. These are the no flash people, but they’re dependable and they get the work done.
  4. Let the CFOs do the math—they’ll do it fast. For poor producers it’s a negative output number!

That’s right, you say, the poor producers:

  • Cost you good customers because of the way they are treated
  • Cost you productivity because they don’t get the work done
  • Cause friction with high performers

Poor producers get hired because they lied at the interview, says Ahlrich. How quickly do your top performers spot these charlatans? Let’s say, a day. How long until the top performers find out how much the charlatans are paid and what their titles are? It’s about another 30 minutes.

Guess what? The charlatans are being paid the same and have the same title as the top producers. How long until high performers become part of turnover problem? About 6 to 9 weeks, says Ahlrich. They wait for the organization to fix the problem, and if nothing happens, they take advantage of the fact that as high performers, they can find a new job.

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Where Are You Spending Your Time?

Here’s the second point to make with managers and supervisors, says Ahlrich. Put the distribution chart up again and reemphasize the importance of the high performers. Then ask, which performers are you spending the most time with?

Typically, the answer is, the worst performers—they’re the squeaky wheel. Why are you not spending time with the top performers? The typical answer is, They don’t need supervision; they think it’s micromanagement.

But, what’s motivating the top performers, asks Ahlrich. Challenge, recognition, and reward. And are they getting any of that? No, we’re ignoring them.

To reduce turnover, you need to spend more time with them. Pretty soon, they’ll invite their friends who are also top performers to join them, says Alhrich..

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Are There times When High Turnover Is Desirable?

Sometimes, Ahlrich says, turnover isn’t the top consideration. He was working with a trucking outfit that was concerned about truck loaders’ turnover of 35 percent, even though the industry average was 50 percent.”

Ahlrich checked in with CFO. The CFO was staring at truck loader productivity charts. A crew of two could typically cycle a truck in 7 hours. The high-performing crews did it in 4.5 hours. But the high-performing crews tended to be recent graduates who left after 12-18 months and created the high turnover numbers.

What about those high-performing crews, Ahlrich asked HR. HR said, Our key metric is turnover. Those high-performing crews—we hate them—we don’t want them because they skew our turnover numbers and make us look bad.

So the situation was that the company could have had much higher productivity, but HR was actively undermining productivity because hiring the most productive crews adversely affected their turnover metric.

The company changed the training process to make it more modular and efficient, put the focus on the productivity number, and walked away from the turnover number.

In tomorrow’s Advisor, how to sell the CFO, plus an introduction to BLR’s popular all-compensation-in-one website,