The Real Cost of Employee Turnover

Jan 31, 2013 | | 13061 |

The Real Cost of Employee Turnover

By Ryan Morrison

In my role at Traver Technologies, I’m often asked about the cost of employee turnover. That is, our clients will ask, “What does it cost to lose an employee?”

Sometimes that question is best answered with another question: “Which type of employee did you lose?”

Losing sales employees can be a blow to your dealership—you lose sales in the near-term, and sometimes customers in the long term, if they followed the salesperson. But let’s be really honest: sometimes, it’s OK, even good, to lose an employee. It all depends on the type of employee we’re talking about.

Defining employee types

Over the years, we’ve looked carefully at dealership organizations and have found three distinct types of sales employees:

  • A players: Successful contributors to the dealership’s bottom line; driven; consistently high sales production
  • B players: Average contributors to the dealership’s success; willing to learn; average sales production, marked by good months, bad months, and months in-between
  • C players: Unreliable contributors to the dealership; lack talents and gifts to achieve success

A players and C players can come in two forms:

  • +: positive impact and influence on dealership culture
  • -: negative impact and influence on dealership culture

An A+ player will not only be one of your top producers each month, she or he will also help out teammates, mentoring, coaching, and teaching where needed or wanted. But A- players will prefer others to fail in order to maintain their “top dog” status.

C+ players are marked by their real and fervent desire to do better; these folks are simply cast in the wrong role at the wrong time. They’re full of heart but deliver inconsistent results, or worse, drain dealership resources. Alternatively, C- players do not have this desire to succeed and their workplace negativity also drains dealership resources and the morale of those around them.

Understanding how turnover affects the dealership

The truth is that losing some employees doesn’t cost anything, but losing others can cost you everything. Now that we know the five main types of dealership sales employees, let’s take a look at each type of employee and how you can better understand the costs of losing them, and what you can do to prepare your dealership for long-term success.

Work hard to retain A+ players

To start, we want to work hard to retain A+ players. Remember, these are your top producers who also want to help out others on the sales team. In fact, you’ll want a whole sales team of A+ players… they bring in big dollars while creating a positive, enjoyable, profitable work culture.

To answer our initial question of “What does it cost to lose an employee?” If we’re talking about an A+ player, the cost to your dealership is enormous, so focusing retention efforts on these players is absolutely critical.

Alternatively, losing A- players has less of an impact on your bottom line; yes, it will be a blow over the first few months. But take a look at the culture of your business. Over the next five years, how does your business look without this person who’s continuously banking on others’ failure, just to maintain his/her success? Do you see a business with a more positive, healthy work environment? One that fosters the growth and development of your other salespeople? If the answer is yes, then the cost of losing an A- player, even at the expense of a few months of sales production, is minimal. But a better solution would be to focus some training and consulting efforts on this group of salespeople in order to transform their workplace attitudes into ones that mimic A+ players. Hold your A+ team up as an example, and work hard to create and retain an entire team of A+ salespeople.

Reorganize C+ players

If you think of your sales team like an athletic team, most coaches will say they’d rather have an untalented player who’s full of heart than a really talented athlete who has a bad attitude. You can train that dedicated player, perhaps moving him or her to a different team. Your C+ players may not contribute to sales production, but perhaps your back office needs their talents in other ways. Why? Because someone who loves working for your dealership is the right employee to keep around, even if it means investing in some training or retraining and reorganizing your teams.

The C- players not only cost you money, they cost you morale. It sounds harsh, but if you have lost a C- player, you might actually see a positive impact on your bottom line. But after losing this type of employee, some self-reflection is in order. Consider the following questions:

  • What recruiting and hiring process(es) attracted this type of employee to my dealership, and how did my dealership attract and hire this type of employee?
  • What is going on in the dealership that prompted this person to leave?
  • What impact did this person’s departure have on other employees?
  • What other lessons should we learn about our business from employee turnover in this category?
  • How many C- players do we have? How can we retrain or reorganize them to make them more productive, more satisfied employees?

There is a cost involved in losing C- players, but it’s a cost that many organizations don’t recognize. There are bigger lessons to be learned through this process of self-reflection; when you lose a C- employee, really take the time to stop, study, and figure out the reasons behind this type of turnover. Many businesses simply let turnover in this category go on unchecked, but that’s a clear indication that the organization or the leadership within the organization has some lessons to learn.

Focus training efforts on B players

Your largest group of employees is your B players; this group typically represents your “average” salespeople and makes up anywhere from 40-75% of your whole team. B players contribute to your dealership and are fairly consistent, and your dealership often relies heavily on this group to survive.

More importantly, most B players really want to do better and become A players—and they can, with the right guidance and coaching. Their positive attitudes will ebb and flow, however, with month-to-month successes or failures, so focusing your training and coaching efforts on this part of your team will not only help build their personal success, but have a positive influence on your dealership and other employees.

Preparing for long-term success

Salespeople in particular see real, financial evidence—every month—of their successes and failures. Who doesn’t want to see a bigger commission check? Similarly, as a dealer, you see real, financial evidence—every month—of your team’s successes and failures. Paying out bigger commissions and incentives is a clear sign of a successful dealership.

So how do you get there? Remember that most people want to be coached and trained to become more successful. Investing in strategic, targeted training and coaching, based on employee type, is the first step toward preparing for long-term success.

Read the quiz question. Think about it. Which group do you focus on? The answer: B players. It’s your largest group, with the greatest gap between current production and potential production. Bs are willing. Bs are capable. Bs want to grow, but need a leader to step up, lead, coach, mentor, motivate, and engage them … getting them to the next level.

 

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Authors: 
Ryan Morrison

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