Johnston will exchange her regional VP role for emerging markets with Yahoo to senior VP for sales and marketing at media codec firm DivX.

“We are very happy to have Pamela join DivX,” said Jordan Greenhall, CEO and co-founder of DivX. “Her exceptional skills and experience will help to improve the operational effectiveness of the company.”

“DivX is a very exciting company at a crucial stage in its development,” said Ms. Johnston. “I look forward to working with the current team to continue DivX’s strong growth as it provides partners and consumers with a better media experience.”

Her transition out of Yahoo’s Sunnyvale headquarters closely followed the announcement that HotJobs power broker Dan Finnegan plans to leave the company at the end of June.

Finnegan will be looking for entrepreneurial opportunities after his exit from Yahoo’s job classified site. Yahoo’s continued hemorrhaging of top executives will keep fueling persistent speculation about the status of their top executive, CEO Terry Semel.

He has been on the Wall Street hot seat for some time. Investors could see the departures of executives beneath Semel as a reason to question the reorganization the company performed, as to its leadership effectiveness.

Turnover is the polite management word for employee loss – whether it is from death, retirement, firings or in many cases employees disgruntlement.

To make matters worse organizations actually even reward high turnover rates. A whole industry has emerged to deal with these issues … The first question should have been asked as to “Why are we hiring in the first place?” “Why did this employee leave?

Retrospection by upper management is often difficult. It is in most cases easier to criticize someone else rather than yourself and as well the quickest route to a career limiting move is to draw attention to mistakes of superiors. You may have heard the phrases at company meetings “We are a proactive organization or business. We do not want yes men (or people) here”.

Yet when proper corrective action or a memo is taken it is often the messenger “who is shot” rather than problem makers. There is a major difference between efficiency and effectiveness. Efficiency can be seen as “How fast did we dig the hole?” Whereas effectiveness is asking the proper question “should we have wasted our time digging the hole in the first place?’

To hire and train an employee d takes a great amount of time, energy and cost.

First the replacement employee has be sourced. Either an ad has to be written and placed in a suitable medium – whether it be online or in a newspaper or magazine.

Cost and time one. Or a commercial employment operation, often referred to as “headhunters “may be employed. There is a cost saving to using such an operation.

Initial screenings are done, expensive management time and travel costs may be saved in screening to rule out lost causes. And as well the employment firm can offer interview rooms which can be costly if the interviews are done away from head office. Headhunters are not cheap. They generally charge a commission charge of 1/3 of the salary, bonuses and perceived value of benefits of the new employee hired down to the benefit of the company car.

Standard interviewing and job hiring procedures usually involve three interviews. A first screening interview. A second more serious, more in depth second interview. Finally another member of “the team” is called in for the final interviews. Usually a more senior member of the “management team”. The concept is that the more senior member will be more experienced and skilled in assessment and hiring judgment skills. As well there is the additional advantage that:” if things do not work out” no one person can be blamed.

Now that finally the new employee is hired the fun and costs are only just starting. The new employee has now to be trained. It is often estimated that the time period to train the employee to adequate performance is approximately a year to a year and a half. There are costs to employee training. Actual time spent in training, the cost of training, management and training staff being taken off the job. There may be travel and hotel costs. The new employee is being trained to benefit the profitability of your organization. However there is nothing so energy inefficient as an empty train rolling down the rails.

All of these costs involved to the organization or business could have easily been prevented in the first place if the experienced employees had been encouraged to stay with the organization either by proper treatment or other means. Remember a major role of fire department is to prevent fires not to fight them.

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Shaun Z. Stevens Career Planner Ace Employment Services Job Agency call_kirk@hotmail.com http://www.winnipegjobshark.com http://www.aceemploymentservices.net

Companies routinely record and report costs such as wages and benefits, Workman’s Compensation Insurance, utilities, materials, and space, yet most companies have no and report the cost of employee turnover. It can be much higher than you think.

How Much is it Costing You?

Several well-regarded studies have recently estimated the cost of losing an employee:

• SHRM, the Society for Human Resource Management, estimated that it costs $3,500.00 to replace one $8.00 per hour employee when all costs — recruiting, interviewing, hiring, training, reduced productivity, et cetera, were considered. SHRM’s estimate was the lowest of 17 nationally respected companies who calculate this cost!
• Other sources provide these estimates: It costs you 30-50% of the annual salary of entry-level employees, 150% of middle level employees, and up to 400% for specialized, high level employees!
• Do a quick calculation: Think of a job in your organization where there has been some turnover, perhaps supervisors. Estimate their annual average pay and the number of supervisors you lose annually. For example, if their average annual pay is $40,000, multiply this by .125% (or 125% of their annual pay, a reasonable cost estimate for supervisors). This means it costs $50,000 to replace just one supervisor. If this company loses ten supervisors a year, then 10 times $50,000 equals $500,000 in replacement costs for just supervisors. This is the bottom line cost. The top line cost? If the company’s profit margin is 10%, then it costs $5,000,000 in revenues to replace these ten supervisors.

Do These Numbers Seem Unbelievable?

Here’s an actual calculation from a well-regarded organization in my community. The HR Manager of this human services organization (housing for disabled persons, sheltered workshops, etc.), estimated that 30 entry level people leave his organization on average every quarter.

This averages out to ten people per month. Let’s be extra conservative and shave SHRM’s estimate (see above) down to $3,000.00 to replace each employee.

This amounts to $30,000 per month, or $1,000.00 in employee turnover costs every day of the month! Annually, this totals $360,000.00.

Actual turnover costs are usually much higher than we think they are — until we estimate them.

You may be thinking, “Some employee turnover is unavoidable, even desirable.” You’re right. Some turnover is necessary, to replace marginal or poor employees with more productive ones and to bring in people with new ideas and expertise. However, high turnover costs are both avoidable and unnecessary.

This is where companies need to focus their efforts. The goal is to retain valued performers while replacing poor ones.

Most companies group both types of performers together when looking at turnover. By doing so, they’re missing the cost and significance of replacing the good performers.

Why Don’t More Companies See This as a Costly Problem?

There are a variety of reasons this is not seen as a problem, all of which cost companies in expertise and dollars. How many of these occur in your organization?

1. No process is in place to tabulate costs. One survey found that only 44% of its respondents had a process in place to estimate turnover costs; 43% of companies relied on intuition, and 13% had no process at all. (1)

2. Costs are not reported to top management. It’s a business axiom that one of the best ways to get top management’s attention is to show them what something costs. However, most top management never gets to see turnover cost estimates because most companies don’t measure them — or if they do, they don’t report them to top management.

3. It’s an inescapable cost of doing business. Except, it’s not! While some turnover is unavoidable and desirable, most turnover, especially among your better and top performers, is largely avoidable. Thinking that turnover is just a normal cost of doing business is the same quality of thinking which says that accidents are just an inescapable part of being in the construction business.

4. It’s an HR problem. While HR needs to be a key partner in reducing turnover cost, this is a strategic issue requiring top management’s attention and actions, in addition to HR’s efforts, to resolve it.

5. Costs are underestimated, and so they register less concern. If costs are underestimated because the organization doesn’t agree on or know what to measure, the statistics generated either register less concern than they should, or are disputed and held in disregard.

What Costs Need to be Fully Estimated?

A comprehensive program measures the following costs:

• Exit costs
• Recruiting
• Interviewing
• Hiring
• Orientation
• Training
• Compensation & benefits while training
• Lost productivity
• Customer dissatisfaction
• Reduced or lost business
• Administrative costs
• Lost expertise
• Temporary workers

There needs to be advance agreement among Human Resources, Finance, and Operations as to which cost measures will be considered valid. Then, it has to be measured and reported.

6. Waiting until there’s a crisis. I was amazed when the executive director of one organization told me she knew that one of her capable managers was unhappy, but decided it wasn’t necessary to take action because she hadn’t received a letter of resignation yet.

Prevention is what works best. Begin to measure your turnover costs and, very importantly, look at who is leaving so you’ll know if you’re retaining your best people.

The time to do this is now. Waiting until there’s a crisis to take action limits your options and success rate. It also often triggers the common response of offering more money to get someone to stay, instead of fixing the original problem.

Why Do So Many Retention Efforts Fail?

These are among the most common reasons company retention efforts fail, even when they’re implemented by capable people.

1. No assessment, so ineffective solutions are chosen. In their hurry to correct a costly problem, companies often forgo conducting a relatively brief and cost-efficient assessment in order to correct the situation faster. However, implementing a solution without diagnosing who is leaving, and why they’re leaving often results in solutions that are incapable of solving the root causes behind turnover.

Diagnosing the reasons behind turnover always pays for itself. Don’t start without an assessment.

2. Implementing too many solutions instead of the most effective solutions. Managers often brainstorm a number of plausible solutions, then implement many of them — especially those favored by top management. However, what is most needed is to select and implement a limited number of solutions which will be most effective at solving the problem. Implementing too many solutions, even good ones, will diffuse your resources and weaken your efforts and success.

3. No way of measuring success to know what works. How do you know which retention solutions you’ve implemented are working effectively and which aren’t, where you need to make refinements, and what strategies you need to drop if you don’t have a way of measuring your results?

How Do We Do a Better Job of Retaining Employees — Especially Our Most Valuable Ones?

First, rank your employees in three categories: best performers, middle performers, and lowest performers. Your objective is to retain your top performers; develop and retain your middle performers, turning them into near-top or top performers if possible; and potentially replace your lowest performers.

Second, agree internally on the measures you’ll use to calculate turnover costs. Be certain you’re taking all costs into consideration. Most organizations greatly underestimate them.

Third, report turnover costs to top management on a monthly, quarterly, and annual basis.

When turnover costs are unacceptably high, or higher than your industry’s average, do an assessment. Find out who is leaving and why they’re leaving. Exit interviews can help you find out why.

You need to know if it is your top, middle, or lowest performers who are leaving so you can gauge the expertise level leaving your organization. You’re obviously going to employ (and pay for) different strategies if your top performers are voluntarily leaving, compared to middle or lowest level performers.

Develop solutions capable of solving the problems you uncover, and only implement a limited number of them.

Measure the success of your retention efforts, and refine them.

Two Very Key Strategies to Save a Large Amount of Time and Money.

Very key strategy # 1: Don’t wait until turnover costs become unacceptably high before you implement an ongoing retention program. Put a retention program in place before you have crisis situation. You not only must find out why employees leave your organization, you must also find out why others stay.

Very key strategy # 2: Survey your top performers now in order to find out what keeps them there, why they might leave, what type of competitive offers they may find attractive, and what they need to be happier and more productive in their jobs. You’ll do a better job of keeping them (along with their expertise and value). You’ll also find out highly beneficial information about improvements your organization needs.

This means driving improvements in your organization by what your best people tell you, instead of focusing on taking care of the ever-present complainers in every organization.

Just How Valuable are Retention Efforts? One source estimated that a 10% reduction in employee turnover was worth more money than a 10% increase in productivity, or a 10% increase in sales!

Retain and gain.

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Ross Blake of Retention Associates helps organizations improve employee retention and reduce turnover costs and problems. He has just written “10 Strategies to Develop an Effective Employee Retention Program.” Web: http://www.RetainsEmployees.com

Josh is the former VP of Business Development at AskJeeves and co-founded a small consulting & advertising agency. Josh contacted me because he had previously worked with Phillip Lan and wanted to personally wish him good luck on with the launching of his new company.

Well, long story short, I went to Reprise Media’s blog [SearchViews] and knew immediately that they got it. I mean, they really understand what the difference between being a dime a dozen seo/sem firm and a true asset to a company’s online marketing efforts. I enjoy perusing their posts and interviews, probably because they follow a similar theme as I do here [humor and sarcasm mixed with technology and marketing].

But also, I like the fact they talk about real business problems and offer good insight and advice on the search marketing industry. They stay away from the fligh by night opportunistic algorithm chasing threads that riddle search engine optimization forums and focus on stuff that’s good and matters. Like site accessibility and Amazon.com’s new site design.

Yes, I was slightly sarcastic about stuff that matters and including talks about Amazon’s new design, but the SearchViews blog team understands sarcasm and humor and they mix the two quite well in my mind.

One post I’m quite fond of is one about agency turnover in search marketing. I think another factor needs to be added to the agency turnover list though, employee competence and turnover rates. The good seo’s are the ones that have built their own businesses using seo and learned how to do it right because they fed their family with the money they made from it.

So they bring practical business experience as well as technical insight into the seo field that a recent college graduate isn’t going to have. They also understand ROI and what it means to make every dime a client spends with you bring a return for them. The problem is that these employess are few and far between and don’t like working for other people because they know what they know and can make more money on their own and not have to deal with politics and red tape.

So one key factor is the ability for top firms to retain key personnel and to train new employees using the wisdom that comes from the experience of these key hires. It’s something that has yet to be done very effectively because of the cost associted with doing it right.

Anyway, I wanted to give props to Josh and his team and let a few others know about a good blog that’s updated regularly and chocked full of good info and not just a rehashing of the moreover news feed or Google news. So go now and read them, they’re pretty good and smart and funny. Tell em large Marge sent ya!

Read Jason’s interview with Philip Lan

Reader Comments…

Jason Dowdell is a technology entrepreneur and operates the Marketing Shift blog.

Additionally, an organization’s reputation becomes somewhat tarnished as others hear and observe revolving-door turnovers. The January 24, 2001 issue of the Wall Street Journal reported “…labor turnover is one of the most significant causes of declining productivity and sagging morale.” Understanding the cause of employee turnover is the first step in being able to control and manage the most costly problem to organizations.

New Hiring/Training Strategies
Successful football coaches have long extolled the virtues of selecting the right players (employees), inspiring them to win, and showing them you (as manager) care about them. Many business organizations are now realizing this. New retention strategies include offering new hires retention bonuses payable after 6, 12, and 24 months instead of signing bonuses. Additionally, a strong orientation/training program has proven to positively impact retention. One local hospital discusses with new employees how they fit into the treatment program providing employees an opportunity to see the significance of their contributions. Aventis Pharmaceuticals show new hires a video that reinforces the role of employees in making people’s lives better. The video features patients who have benefited from the company’s allergy medications discussing how much those medications helped them. In a radically different industry, Harley Davidson puts up large, full-color posters of Harley owners standing beside their motorcycles, to remind employees of the important role they play in customer satisfaction. Taco, Inc. (a heating and cooling equipment manufacturer in Cranston, R.I.) knows the benefits of providing employees training opportunities. They have an annual turnover rate of less than one percent, while revenues have increased at a steady 15-20 percent annually since opening their employee- learning center. IBM set up internal career center where employees can attend lunch-and-learn seminars and other subjects relating to career opportunity and growth. Microsoft created an electronic campus for employees providing professional development resources. Ernst and Young, Price Waterhouse and Hewlett Packard provide a highly structured online mentoring program that has resulted in significant reduction of employee turnover.

Work/Life Balance
Larger companies are finding they are losing top-notch talent to start-ups, because the latter tend to offer more autonomy and flexibility in day-to-day work. Flexibility in work arrangements is also an important factor in retaining employees. In a survey conducted by Wirthlin Worldwide, 75% of the respondents stated that they must take some company time at least once a month to tend to personal needs. Of the group surveyed, 40% responded that they take work home or work overtime at least once a week. Understanding work-life balance is important even in places such as fast-food restaurants. One example relates to Steve Bigari who owns nine McDonald’s restaurants in Colorado Springs. He implemented “McFamily Benefits” to reduce turnover in a 300% turnover industry. His benefit plan offers access to transportation, education, health care, housing, childcare, and even stock options. He’s able to offer these programs because of collaboration with state, nonprofit and private agencies. All employees qualify after 90 days. The idea behind Bigari’s plan is to build a trusting relationship between employee and employer and to get them the benefits they need. His retention statistics reflect his efforts are working.

Poor Managerial Coaching
A good manager can make even the worst of working conditions tolerable, and a bad manager can make the best company one of the worst. The manager’s style creates a certain type of relationship with employees. If that relationship is a poor one, it can drive employees away from the workplace. The January 24, 2001 issue of the Wall Street Journal cites an example of an engineer who was a poor manager. The engineer was a micromanager, and did not provide employees the opportunity to grow and flourish. His team finally ground to a halt in productivity. The CEO recognized this and reassigned the engineer to a project that utilized his individualism. The employees were given a new manager and of course, production improved.

If your employee turnover is high, find out why. Retention should be an evaluated competency at every level of the organization. Until there is accountability or negative consequences from high turnover, don’t expect it to stop.

Freda Turner teaches at the University of Phoenix and Embry-Riddle Aeronautical University in Daytona Beach, Florida. She may be reached at fturner@email.uophx.edu.