Dear Operational Leader, “Why should I Work for this Company?”
The Bureau of Labor Statistics recently released unemployment data for August 2018 which noted that 6.2 million people who have actively searched for work are unemployed. How does one find a job with that many individuals out of work? On many websites including Indeed, Monster, and LinkedIn, we can read about the frustrations of many skilled job seekers because of competition in the job market. On the flip side, with our economy showing improvement, companies are still struggling to find talented candidates. Jobvite’s 2018 Job Seeker Nation Study, states that job seeker’s expectations are high. Those who are qualified for an open position have more leverage than they have had in recent years for many reasons. The job application process is designed to eliminate non-qualified candidates from the pool. Systemic filtering processes further reduce the number of candidates to a manageable quantity for the Human Resource team or placement agency. This number is narrowed down again to only a few who interact with a decision-maker. A lack of qualified candidates means a challenging environment for companies searching for talented people to join their organizations and the agencies hired to acquire employees that will stay with those organizations for the long term.
Placement agencies, Human Resource Professionals and virtually anyone involved in employee acquisition and retention have been shouting to the heavens that it's harder to find good employees and keep talent at organizations for a significant time now. Those of us outside of the talent acquisition groups have primarily ignored those concerns for that same period. As a Senior Manager who has lived in the manufacturing operations world for most of her working career, I can attest to the attitudes of many (not all, but many) operations leaders who are responsible for "making money" in public and private companies both small and large. The Human Resource team or outsourced agencies are responsible for bringing in talent. Operations leaders are responsible for making money. We do not focus as sharply as we should in procuring talent. We do not understand our role in the development of a company brand. Not a product brand, a company brand. Something that answers the question, "why would someone want to work here?" Operations leaders are too busy calculating the staffing needed to maintain a productivity target and keeping costs low. We are too busy courting customers to generate revenue and developing parts and services that satisfy our customer’s need. We are too busy reporting out to our directors, presidents, boards, etc. to consider that we could improve our bottom line by participating in developing, implementing and living a company brand that will attract and keep talent.
I do not intend to criticize operations leaders. I am stating a fact which comes from someone who has made my share of mistakes regarding my role in talent acquisition and retention. It's not an intentional error; it's simply one that happens. Operations leaders are measured exclusively by what they deliver to the organization. This deliverable is output at the lowest cost possible that will satisfy the requirements of the customer for the product or service. Teams celebrate successful operational leaders who meet the company objectives and those who do not achieve the business objectives face the proverbial consequences. It's easy to understand why operations leaders leave the employee hiring and retention programs to those who are traditionally responsible for these activities. It’s a matter of simple self-preservation.
But as a leader in your organization, reflect on the ways high turnover and training costs affect your goals. Beyond the obvious effect on the morale of the work group, there are real costs that will change the outcome for which you are held accountable. Josh Bersin of Bersin by Deloitte outlined factors that are included in the “real” cost of losing an employee. These factors include:
- Cost of hiring (advertising, interviewing, screening and hiring)
- Cost of onboarding (training and management time)
- Lost productivity (depending on the experience of the leaving employee)
- Job training cost (estimated at 10% - 20% of the employee’s base salary)
- Employee error (less familiar with and less effective at solving problems)
- Existing employee disengagement (less productive during high turnover)
Now for the numbers…and these numbers can be shocking depending on the research group. But even with conservative estimates, the numbers are significant and will have an impact on your operational metrics.
- Estimated cost of replacing an employee for hiring, onboarding and training only can equal six to nine months of the departing employee’s salary
- Hourly manufacturing employee ($15/hour) = $15k to $23k
- Mid-level salaried employee ($60k - $80k) = $30k to $50k
- High-level exec ($110 - $150K) = $55k - $113k or more
- Over loss should also include the costs that are more situation specific
- Lost productivity based on new hire experience
- Lost productivity based on current work force turnover distraction
- Employee error
- The Huffington Post put it this way in a January 2017 post:
- As an example, if you are a 150-person company with 11% annual turnover, and you spend $25k on per person on hiring, $10k on each of turnover and development, and lose $50k of productivity opportunity cost on average when refilling a role, then your annual cost of turnover would be about $1.57 million.
It becomes easy to see that no company can afford that type of loss. How frustrating is it for an operational leader when the defined objectives are trending in the right direction, and there is confidence that this will continue only to have a key player leave the organization? Not only can this disrupt the positive trend, but the leader faces the possibility that talented candidates may not apply for the role that has been left vacant. The effect of a long-term hole in the team can impact an organization (and a leader's success) dramatically.
Recently, I worked with an organization struggling to re-engage the employee group. This company had an early history of community service and employee collaboration during the organization's startup. But, in the last few years, an expansion of the facility and the addition of a high number of new employees had negatively affected the company brand. The employee group no longer felt like a cohesive team of people striving to achieve the same goals. Sure, there were still those among the team that very much wanted things to be "like the old days," but a high percentage of senior team members had become unhappy and disengaged. New employees were being hired at a rapid pace which strained training resources and limited the time for orientation and onboarding. With almost one-half of all employees relatively new to the team, the company brand had been lost. The team was broken, and as a result, performance was declining. Declining performance only increased frustration and dissatisfaction.
The Operations’ Manager and supervisor group were doing what ops managers and supervisors do. They focused on traditional improvement methods. Most of us know them well – standard work, OEE, scrap reduction, and equipment upgrade. The operations team was working hard and making some small improvements, but no real change and they were a long way from hitting their budgeted goals.
In this instance, it became apparent that no significant improvement would occur until employee engagement was improved. Operations realized that they must be a partner with human resources in the hiring, orientation, on-boarding and training process. They realized that they must be able to answer a straightforward question for their employees, "Why should I work for you?"
That question requires more than just a half-hearted answer. Anything less than a formal, identified, implemented and well-lived company brand that an employee can understand from the very first moment that they speak with a company representative will fall short in changing performance. All members of the leadership team, but specifically the Operations group, must be heavily involved in the process. The brand cannot be ignored for other priorities. Instead, it should be viewed as a foundation for all improvement activities. My organization worked hard for months to develop and implement a structured company brand. These activities can take time to begin to demonstrate results, but a well-done program will drive improvement for years.
Does your organization have a company brand? Can the business answer with confidence the question from a talented candidate, "Why should I work here?" If not, KM Shinn Consulting, LLC can help. As a Senior Operation's Executive, I understand the challenges a company faces when they cannot attract and retain talent. For more information, contact email@example.com or visit our website at www.kmshinnconsulting.com