Archives for June 2011

Employee Turnover On The Rise.

Employee turnover rates will be slightly higher this year compared to a year ago according to the just released Convenience Store News 2011 HR & Labor Study. 

Turnover is nothing new to convenience store retailers. Historically high employee turnover was treated as a fact of life and absorbed almost as a fixed expense. But this year stiffer competition for good workers from other businesses is adding to voluntary and involuntary termination. To become more competitive, many retailers have increased salaries and benefits for their store level workers, according to the study. 

Convenient stores aren’t the only businesses facing higher turnover. Employee turnover at restaurants is on the rise, according to the latest People Report Workforce Index (PRWI). For the first quarter of 2011, the PRWI found that 47 percent of surveyed companies reported increases in hourly worker turnover and 49 percent recorded higher management turnover. 

“We’re entering the era of the disengaged as many employees seek alternatives elsewhere,” said Bob Kelleher, CEO of The Employee Engagement Group. Recent research from Glassdoor.com’s employment confidence survey supports Kelleher’s views.

According to the survey, 73 percent of employees say they will leave their job in the future and more than one in three expect to do so within the next three years. 

Additionally, MetLife’s 9th annual study of employee benefits trends found that employees hope to land a new job in the next 12 months as employee loyalty wanes. “Very strong” employee loyalty, according to the study, plunged to 47 percent from 59 percent just three years ago. 

Kelleher also projected that businesses will not simply return to their pre-recession turnover levels. For instance, if a company’s traditional voluntary turnover dropped from 15 percent to 5 percent, the 10 percent of the workforce that didn’t leave during the past year is now in queue, and will be in addition to the traditional 15 percent voluntary turnover. 

The cost of turnover is expensive. The loss of an employee for any reason hits the bottom line and not in a good way. Replacing an employee not only requires time, money, and resources but it requires more sales to recoup the loss. For example, the loss from just one crew member in a fast food restaurant required the sales of an additional 7,613 children’s combo meals at $2.50 each. A clothing store has to sell almost 3,000 pairs of khakis at $35 to recoup the loss of one sales clerk. 

Convenience stores and fast food restaurants restaurants (as well as every business in every industry) must prepare for higher turnover and employee disengagement as the economy improves and the unemployment rate declines. 

Employee turnover is not a cost of business than can be absorbed. Studies by American Management Association and others report a range between 25 percent and 250 percent of annual salary per exiting employee. While entry-level, lesser skilled positions are at the lower end of the cost range, turnover at these positions cannot be ignored. 

A 2010 study by the Canadian Grocery Human Resource Council pegged the cost of turnover for the front line, part time grocery clerk at $1,300. While $1,300 might not seem like a lot, consider that when turnover is in the mid to high 30 percent range (which it is for many grocery stores), a store has to sell between $32,5000 and $65,000 in groceries to recover that cost (assuming a 2 to 4 percent net margin.) 

The costs of employee turnover however can be tamed by implementing best practice solutions which include honesty and integrity tests, pre-employment personality job fit tests for convenience stores and fast food restaurants (hospitality), and employee training.

 

This article originally appeared in The Total View, a weekly online newsletter that focuses on hiring, management and retention strategies. The Total View is written and published by Ira S. Wolfe, president of Success Performance Solutions and is distributed with permission by The Chrysalis Corporation. Subscribe for FREE to The Total View by typing your e-mail address in the newsletter sign-up box on the right side of this page.

7 Reasons Why Employees Fail

If you ask 100 managers explain why employees fail, you will likely get at least 101 different answers. But once you remove all the smoke, mirrors, theories, and old wives tales, there are really only seven reasons. 

1. Lack of Technical Skills/Knowledge. Everywhere you turn these days it seems you read and hear about the shortage of skilled workers and the Baby Boomer brain drain. A lack of skills and experience may prevent a candidate from being hired but is far from the most common reason, an employee is terminated. In fact, most employers seems to be overly tolerant of under- and unskilled employees they like.

2. Cognitive Skill Mismatch. Cognitive skills, or general mental abilities, are playing an ever-increasing role in employee performance. Unfortunately, few employers recognize or understand how important they are. But human nature tends to want to hire “really smart people” even when the job doesn’t require it or the culture support it. That just leads to early boredom and frustration. Just as common a mistake is underestimating the role cognitive skills play when an employee is up for a promotion. A very capable supervisor with average or even low abilities might fail as a manager because the new role requires them to manage a more complex environment and respond at a faster pace. Going forward, more employees will fail if cognitive skills are ignored.

3. Poor Personality Fit. At the core of every human being are key personality traits that determine how people respond to competition, initiative, conflict, flexibility, traditions and organizational policy, large groups of people, mental toughness, curiosity and more. Research shows that these traits predispose many workers toward a “natural” competence in areas such as drive for results, follow-through, detail-orientation, planning and organizing, interpersonal skills and stress management. Mismatches between a proven “best-fit” profile for the job and the individual in the job leads to significantly higher incidences of turnover, poor performance and stress.

4. Poor Behavioral Style Fit. Behavioral styles predict no more and no less than how an individual will behave in the workplace. It doesn’t predict success or competence but the way people will respond to (or ignore) problems, people, pace of the environment and procedures. Mismatches between job and personal styles and inter-personal styles don’t necessarily guarantee failure but do ensure that stress and conflict will eventually show its ugly and costly face. How an individual learns to adapt and a manager learns to respond ultimately determines if harnessing the energy of behavioral style will boom or doom employee performance.

5. Poor Values Fit (Motivation).While people can learn to adapt behavioral styles, adjusting personal values, or motivators, is not so easy. In fact, people generally don’t change what’s most important in their lives without some life-altering event like the death of a loved one, a personal tragedy, starting a family, divorce and so on. When values collide, some people will adjust their behaviors to reduce conflict between other people or the job. But with time, the tension between different values wins out. Workers then decide to leave the job or fight for their cause. In either case, the cost to the employer (and many times the health of the employee) is enormous. Selecting individuals who are motivated by the job and/or company culture is just one way to make sure employees expend their energy on productivity not conflict.

6. Poor Team Fit. While team fit is a very common cause of employee failure, it is really cited as the reason. But it has been my experience and contention that fit on a team trumps job fit any day. A highly skilled employee who doesn’t mesh with the team for any number of reasons either will be driven out of an organization by conflicting co-workers or the co-workers themselves might leave. In either case, the effectiveness of a competent employee will never be realized if he or she doesn’t fit on the team.

7. Poor Cultural Fit. Team and cultural fit may be synonymous for small business. But in larger organizations, a highly skilled individual can become a lost soul if his personal values clash with the culture. It could be as simple as the employee wanting the opportunity to climb the career ladder but the path to do this is reserved for a chosen few. Or it could be the Fortune 500 executive who accepts a position in a non-profit organization. Competence and experience don’t have a chance to shine if the culture suffocates it. More commonly, value differences over faith, politics, or management style can easily turn a high performing employee into a failure.

So there you have it – the seven reasons employees fail. Now the question becomes” what can an employer do to prevent these failures.”

One of the most efficacious things a company can do is match people to jobs, teams and cultures. Hire, promote, and build teams that play to employee skills, behavioral style, motivations and values respectively. Making these good employee job matches requires that managers possess rich and detailed information about their employees and candidates. Pre-employment and professional development assessments are not only cost effective, valid, and legal but also a prerequisite for recruiting, retaining, and engaging employees.

This article originally appeared in The Total View, a weekly online newsletter that focuses on hiring, management and retention strategies. The Total View is written and published by Ira S. Wolfe, president of Success Performance Solutions and is distributed with permission by The Chrysalis Corporation. Subscribe for FREE to The Total View by typing your e-mail address in the newsletter sign-up box on the right side of this page.
 
 

Managers Don’t Trust Pre-Employment Tests: Why?

Would you hire a candidate if he agreed with the following statements during the interview?

  • I am usually satisfied with work that is “good enough.”
  • It is not necessary to do more than enough work to get by.
  • My anger frightens other people.
  • Sometime you have to lie a little to protect yourself.

Would it surprise you to find out that many managers do say yes. If so, you wouldn’t be alone. Thousands of managers make that decision every day; ignoring the results of pre-employment tests and allowing their egos and gut instinct to rationalize very clear signs of employee behavior danger.

Pre-employment tests enjoy a love-hate relationship with managers. Some managers live and die by the results of a pre-employment assessment test in screening out candidates. Others despise the notion that a simple questionnaire might second guess a hiring manager’s gut feeling about how well a candidate might fit into a job. The fact is that both approaches are flawed.

Hiring ManagerFirst of all, both parties must consider moderation when using pre-employment tests. The die-hard advocates must put the results of these tests in context. No test should be used as the sole determinant in screening out or selecting a candidate. The best formula for hiring is one-third interview and experience, one -third reference and background checks, and one-third pre employment assessment tests.

Alternatively, ignoring employment tests as part of the employee selection process ignores a powerful ally in the search for the right fit candidate. A validated assessment offers an objective third party view of a candidate, often exposing character flaws as well as unidentified potential.

Then we have situations where the assessment results paint a clear picture of a risky hire and the manager’s opinion is called into question.

For instance, I received a phone call just the other day from a manager questioning the results of candidate’s honesty and integrity report. A candidate revealed during the interview that he had been picked up twice during the last year for driving without a valid license. The candidate explained this away by saying he had a mortgage to pay and a family to support. “I couldn’t afford to lose my job,” he said.

The employer interpreted that commitment to his family as a positive value. He questioned why the pre employment test would raise red flags about this individual’s character when he was such a good father and husband. He rationalized away that driving despite a suspended license was still illegal no matter what the reason. He ignored how this candidate might respond again if he lacked the money to pay his mortgage, to put food on his family’s table, or to purchase medications for his children. Would he resort to “borrowing” money from his employer without the employer knowing it? That’s exactly what many employees caught embezzling fund say when caught – “I wasn’t stealing because I meant to pay it back.” What lies would he be willing to tell to protect his family?

If you think I’m exaggerating, consider what lengths one employee working for a Wisconsin business went to “keep her husband happy.” (Hint: she had systematically stolen more than $600,000 from the business over five years.)

While not absolute, the pre-employment test prompts red flags in areas of conscientiousness, hostility, and honesty. The responses on a validated assessment clearly indicate how a potential candidate like the one described above might react if given a choice between family and the law. And yet employers choose to doubt what they read in the candidate’s report despite numerous confirming statements about questionable integrity.

Pre-employment tests can offer valuable insight into a candidate’s integrity, work attitude, and job fit. They are effective and reliable indicators of job fit and future performance. Ignorance is not bliss when hiring employees and pre employment assessment tests can help managers hire smarter.

Learn more about how to hire employees with a positive attitude.

This article originally appeared in The Total View, a weekly online newsletter that focuses on hiring, management and retention strategies. The Total View is written and published by Ira S. Wolfe, president of Success Performance Solutions and is distributed with permission by The Chrysalis Corporation. Subscribe for FREE to The Total View by typing your e-mail address in the newsletter sign-up box on the right side of this page.
 
 
  

Why Do Businesses Lie About Customer Service?

Why Do Businesses Lie About Customer Service?

Business owners and executives continue to extol the virtues of customer service. But when it comes to commitment, they are full of hot air.

You don’t have to go far or listen hard to hear stories of bad customer service. Everyone you speak to seems to have a customer service story that is worse than yours. Just this past weekend, I again was jinxed by a rash of bad customer service experiences.

First I stopped by a pharmacy (a national chain) to pick up two simple items. I looked around for the friendly face of an employee but there were none to be found. To be specific, I’m not talking about a friendly face…I’m talking about any face at all!

After wondering up and down the aisles, I finally found two travel tubes of toothpaste. I then headed for the checkout line – which was empty. Most notably there was an absence of any cashiers. I waited for a few minutes only to notice two employees standing outside – smoking. I waved to them through the large windows….but was ignored. I then went outside and asked, “is there anyone who can check me out?” To which they responded, “we’ll be there in a minute. We have to hang this sign.” Why it took two people to tape one sign to a window, I don’t know. But this obviously took precedence over my need to pay. Without even the slightest hesitation, I reached out, handed them the toothpaste, and drove away. A few other customers remained inside, wondering around the store. Hopefully they were honest souls because no one was watching the store – or for that matter working in it. Management at least at this company store seems to have cut back on human resources and service a bit too deep. From the lack of traffic, other customers must agree.

Later in the day we went to dinner with friends. We had a large group so we requested separate checks. The waitress said, “no problem” and took our orders. But apparently it was a problem for her since not one of the six couples received a check with the correct orders on it. One of our friends motioned to her and told her the checks were wrong. To this she replied, “I’m really sorry.” And then proceeded to ask us to “figure it out ourselves because [I’m] not really good with math.” We did figure the checks out and decided next time we’d dine elsewhere.

While neither of these incidents was horrific, the outcomes were the same – dissatisfied customers who at the very least will do business elsewhere next time.

Michael LeBoeuf in his book How To Win Customers and Keep Them for LifeCustomer Service Assessment Test cites a survey designed to discover why customers quit doing business with a company. The survey revealed that 68% quit because of an attitude of indifference toward the customer by the owner, manager or some employee. In both of the experiences I just shared, indifference was crystal clear. When considering the life time value of a customer, studies indicate it costs roughly 300 to 700 times an hourly worker’s rate. That’s a lot of money that few businesses can afford to absorb but management seems complacent enough to keep paying.

The real crime is that these bad customer service experiences can be prevented if employers would take a few steps to hire employees with a positive customer service attitude and good skills. But employers continue to seek candidates who have good customer service skills and then hire any warm body who accepts the job. When you consider the high cost of a bad hire, the ROI associated with improving employee screening and interviewing is significant. By combining a good behavioral interview with pre-employment testing, business owners can hire better, reduce turnover, improve customer retention, and save thousands of dollars.

So what will it take for companies to recruit and hire employees who have a positive customer service attitude and commitment?

 

This article originally appeared in The Total View, a weekly online newsletter that focuses on hiring, management and retention strategies. The Total View is written and published by Ira S. Wolfe, president of Success Performance Solutions and is distributed with permission by The Chrysalis Corporation. Subscribe for FREE to The Total View by typing your e-mail address in the newsletter sign-up box on the right side of this page!