The “Secret” To Profitability Through Your Staff Is...
Volume 2--Issue 1, January 4, 2008
Profitability continues to be a concern and staffing issues, as always, are part of the solution. More and more firms contract their human resource from companies that specialize in the needed personnel area(s) whether these companies are in the same city, other country or even other continents. That only goes so far and many companies do not have personnel issues that can be solved by that solution. You can’t outsource management, leadership, or a quality sales force. So what is the “secret” to profitability through your staff?
We continue to face numerous issues that increase the pressure on organizational profitability. The employee voluntary turnover rate for all private industries in the USA in 2006 was 26.5% (US Bureau of Labor Statistics study). Sub prime mortgage and other issues are impacting real estate, construction, mortgage, financial and other related segments of the marketplace, and as a result we saw even higher turnover rates this past year, especially in these industries. The average cost to a company for a manager or professional staff leaving is estimated to be anywhere from 25% to 200% of the position’s annual salary. Calculate the real cost of replacing quality staff and the opportunity costs of lost sales, services, and/or ineffective leadership because of the costs associated with these people leaving, and organizations experience huge negative economic impacts. The impact of the leaving of a Jack Welch at GE, for example, can’t even be calculated, but is felt!
Add to the above the fact that employers estimate that 39% of their current workforce and 26% of new hires have basic skills deficiencies (US Bureau of Labor Statistics report). The Conference Board reported in a September 2005 study that business leaders found that current and prospective staff are lacking a number of specific skills. Some of these skills include supervision, team building, goal-setting, planning, motivation, decision making, and ethical judgment. Estimate the costs of a lack of these skills in your organization and add these to the above mentioned costs and deficiencies in your human resources becomes even more expensive.
The drain of the human resource on profitability is even more complicated. Billions of dollars are spent each year to train staff on specific and selective behaviors the organization thinks are important to competently service its clientele. There are thousands of corporate and organizational “universities” that train staff even after the two or four year undergraduate degrees many of their staff bring with them to the organization. This further increases human resource costs of incorrect employee behaviors by new hires and current staff. How much energy do you personally exert annually, and your organization spend annually, to deal with orienting and training staff?
Employee turnover costs, the costs of employee skills deficiencies, and the cost of orienting and training staff on requirements unique to your organization are astronomical and significantly impact organizational economic bottom lines.
But wait! There is still more! All of this turnover, lack of relevant skills, and inadequate training also impact staff satisfaction, personal psychological stress, tension on the job, conflicts between staff, inappropriate team behaviors/actions/dynamics, and ineffective and pressured management and leadership.
Is there a “secret” or “magic pill” to profitability through your staff? How much would it be worth to you and your organization for a solution to these human resource ills and unrelenting costs? In our next article we share with you the “secret” we have found through almost 30 years of experience consulting and working with over 1000 organizations on three continents.
Next e-letter; The Secret To Profitability Through Your Staff … Unveiled!
(Article #2 in a series of articles looking at profiting through your human resource)