Herman Trend Alert: The Global Problem of Short-Term Turnover

Filed under: Opinion |

A major personnel cost for employers is the turnover of employees with less than one year of service. Research conducted by a number of companies shows that if an employee stays for a year, there is a strong likelihood that the person will remain with the company for a much longer time. Unfortunately, many employers suffer from a costly churning in their new-hire labor force.

This problem will intensify during the balance of the decade—on an international basis. Early indications from several countries, including the United States and England have reported these findings. According to the Chartered Institute of Personnel & Development, in the United Kingdom, one in five new employees leave after less than six months and half of the people leaving have only two years’ service. A common reason for leaving is lack of support from line managers, cited by other recent surveys on the topic as well.

The challenge seems to be that well-qualified middle and senior managers are difficult to hire, according to the results of the latest Recruitment Confidence Index survey conducted by the Cranfield School of Management and The Daily Telegraph in London. Too many of the people currently occupying those important leadership positions lack a full appreciation of their organization’s vulnerability to expensive, high new- worker turnover. They fail to comprehend the impact of entry-level instability on building a solid work force for the future. Their subordinate managers are not hearing a message of alarm, nor are they receiving adequate training in how to hire selectively and retain effectively.

Part of the problem lies in the fact that most employers believe there is a natural level of employee turnover, that new people should be brought in on a regular basis. They assert that it is not healthy for too many employees to stay with the company indefinitely. There may be some small merit to that

position, but if you allow the churn to rise too high, the business begins spending more on recruitment than is necessary. This factor will become a serious bottom line issue for employers who tolerate high turnover among new hires.

From “Herman Trend Alert,” by Roger Herman and Joyce Gioia, Strategic Business Futurists, copyright 2004. (800) 227-3566 or www.hermangroup.com. The Herman Trend Alert is published each week in English, Spanish, and Portuguese.