The Hidden Costs Of Employee Turnover
By Bill Pettit
Employee turnover is a concern facing everyone in the senior-housing
industry. As staff come and go, assisted-living owners are wondering what can be
done to stem the tide. This revolving door forces us to try to get a clear
handle on the real cost of turnover in our communities and most important, seek
ways to avoid it.
In evaluating staff turnover in a community, the focus is often on only the
most obvious cost issues. Employee turnover leads to overtime for remaining
employees as they struggle to fill the gap until a new employee can be hired and
trained. It means bringing in higher-cost agency staff to temporarily fill the
needs left by the departing employee. It causes a rise in training costs as new
employees get up to speed. Added together throughout a community, these costs
can have a surprisingly large impact on the bottom line.
Often overlooked in this equation, however, are the less obvious, but truly
tangible costs of replacing departing employees. These hidden costs are not as
easily tracked to the bottom line, but may ultimately have the largest impact on
our communities.
As employees leave, staff morale can take a hit as those remaining are asked
to take on extra shifts and duties. Repetitive training for new employees means
lost productivity for other staff members who must provide the required teaching
time. Change is unsettling for everyone and employees may become unsure about
their own job security as they watch others come and go.
In addition, the emotional toll of employee turnover is tough on residents,
which can directly affect occupancy levels. They lose their sense of security by
not knowing who is caring for them on a daily basis. People they interact with
and treat like extended family suddenly disappear from their lives and this is
unsettling to residents.
Imagine that you ate dinner in the same restaurant every night, looking
forward to your daily conversations with your favorite dining-room server. One
night you come to dinner and learn that your server--someone you considered a
close friend--is gone, replaced by someone new. You would, of course, be
confused and upset, especially if no one took the time to explain the situation
to you. This scenario can be played out at all levels of our communities as
residents form bonds with housekeepers, caregivers and managers.
As residents struggle with their feelings of loss, they share their concerns
with other residents in the community at large. The emotional hit is obvious, as
negative feelings begin to grow and influence the attitude of everyone in the
community. And this pattern can be repeated over and over again as employees
continue to leave.
As residents share their concerns with friends and family, opinions about the
community are quickly formed and can have a negative impact on the marketing of
a facility. We all know an enthusiastically supportive group of residents is the
best asset available to sell communities to prospective residents. Word of mouth
is a powerful tool and high turnover may make it difficult for residents to
enthusiastically recommend the community to others. Ultimately it can make it
harder to keep the building full.
As we evaluate these hidden costs, we should also be aware of the fact that
the people who work in our industry are compassionate. Our caregivers,
foodservice workers and managers are driven to this industry for many
considerations other than compensation. While the healthcare industry in general
has always had to deal with compensation issues in a struggle to keep healthcare
costs down, we are finding adequate levels of compensation may be one of the
keys to reduce high employee turnover. The retirement industry is currently
coming to grips with this issue, punctuated by the fact that most operators hire
people at higher salaries than the employees who left, especially at the
management level.
In evaluating the hidden costs of employee turnover, we must take into
account the obvious dollar loss and factor in the realistic account of less
tangible costs. The bottom line is that better compensation packages and
benefits, including vacation time, are needed. These benefits are a way to
improve teamwork and a sense of staff interest in building a career instead of
moving away from the industry.
These are steps to decrease turnover:
- Be proactive and aggressively reward people who really do a good job for
your community. Don't wait to pay turnover costs, use a portion of that to
reward people so they don't leave.
- Carefully review benefits. Some people may be less concerned about medical
benefits because they receive them from a spouse. They may be more
interested in vacation benefits that help them to relieve the stress of
their position. Determine what is most important to your staff and offer
benefits that meet their needs.
- Increase the profile of training through the use of videotapes, technical
training and personalized training. Employees who feel confident and
competent in their jobs are less likely to leave.
- Institute programs to say "thank you" to employees. Meaningful
bonus and reward programs can make a big difference.
- Make sure existing staff has the first opportunity for openings within the
company. Ensure employees know they have a chance for advancement and can
move up within your company in other locations around the country.
 Bill
Pettit is president and COO for R. D. Merrill Co. and Merrill Gardens LLC.
Seattle-based Merrill Gardens is the second largest privately - held
assisted-living company in the country, operating 59 communities in 15 states.
Pettit joined Merrill Gardens in 1992 after 18 years in the banking
industry. He has been instrumental in the rapid growth of the company and
developed the policies that speak to Merrill Gardens' commitment to quality. He
can be reached at billp@merrillgardens.com.
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