Employee Turnover May Cost You More Than a Valued Employee  |
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 The costs of employee turnover may be greater than you think. The costs of poor employee retention and high turnover can be more devastating than you ever expected. Of course there are the financial costs such as severance pay, recruitment costs, new training costs, sign-on bonuses and much more that quickly come to mind. Statistics suggest turnover can cost 1/2 to 5 times an employee's annual salary. But have you thought about the cost of lost customers that can be attributed to employee turnover?That's right - when an employee leaves your organization often times so do customers loyal to him or her. Scary isn't it? Sales positions are most vulnerable to a loss of customers when an employee leaves. Many customers form a strong relationship with their sales representative and place a great deal of trust in this individual. Whether it is an investment consultant, a raw materials supplier, or an insurance agent the relationship between the client and the sales rep is the foundation for any transaction. Its not hard to imagine that this sort of phenomena takes place in a number of organizations, but you might be surprised just how frequently it occurs, and in almost all industries. A close friend of mine told me a powerful story of just how true this trend is. His father, we'll call him Jon, has worked for a number of years as an inside sales representative for a pair of automotive service centers in my hometown. Jon first came into this position after a number of years as an auto mechanic at the first service center he worked with and was an excellent choice for the position as an inside sales rep with his superior technical knowledge and his abundance of soft skills necessary for the job. Jon is one of the friendliest, most caring people you will ever meet who always puts others needs before his own.  After several years of working in this position things started to head south for the service center. A number of good managers were lost and hastily replaced with a sub-par management team. Employee morale began to suffer throughout the service center and there was a steady erosion of a once enjoyable organizational culture. Turnover increased at an alarming rate among the mechanics making life more difficult for everyone. Finally things got bad enough that Jon too left after nearly a decade of dedicated service to his employer and his customers. Jon was quickly snatched up by a rival service center to lead their inside sales department. Can you guess what happened when Jon went to work for the competing service center? That's right...a strong majority of his regular customers at the previous service center followed Jon to his new employer's service center. Remember...80% of your revenues come from 20% of your customers... Jon's previous employer paid a pretty penny for losing an employee like Jon. The previous employer assumed that since these customers had been loyal to their service center for many years, that things would always be that way. WRONG! These customers were most loyal to Jon because he was a person who could above all else be trusted to treat the customer fairly and with respect: qualities that one can be hard pressed to find in many auto service centers. Losing a valued employee like Jon can cost a firm much more than the skills and talents Jon possesses. As this case demonstrates it can also cost a firm a significant amount of business from customers who are loyal to a team member, not necessarily the organization. They key to preventing this loss of business is to keep your top team members on "your bus" At The Rainmaker Group we are committed to helping your organization identify the superstars in your team and develop strategies and programs to ensure that they stick around. Give us a shout and we'll discuss how you can better retain top talent in your organization. We're here to help and would love to hear from you! 1-866-988-RAIN  Additional Information and Resources:  |
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