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UH OH!! Turnover is Starting to Rear Its Ugly Head Again

It's happening. Turnover is baaaaaack. Good employees are starting to leave their companies when another opportunity presents itself. Turnover hurts. It causes confusion and turmoil internally and can also cause consternation with your clients and customers. The cost of turnover in cases in which employees have a strong relationship with your customers and clients is impossible to measure.

We have seen it ourselves. McKenzieHR had two very talented people who left the fold in the last few months. Losing one is not so bad and recoverable. Losing two in that time frame is downright embarrassing especially since we are a human resources management firm.

Not that I can blame either of them for leaving, as both were given the proverbial "offer they could not refuse". No – this was not Vito Corleone style as nobody put a gun to their head. Neither of them was actively looking for another job. Both received offers from their former employers out of the blue. Both of the companies are members of the Fortune 500 list.

As a small and developing company, there is no way we can compete against corporate behemoths. Then again, it also tells me that I hired good people (which is just my way for me to justify losing talent).

Ramifications

Aside from the obvious problems with client relations, there were a number of things that had to be put on hold.

• This is the first newsletter we have published since May. I vowed to get it out every month a long time ago.  I just did not have a lot of time to concentrate on it. The McKenzie Mailer has always been a good way to stay in touch with our clients, potential clients, friends and business partners.  I cannot tell you the number of times over the years, this newsletter reminded clients to call us.    
• A badly needed website update did not happen and is currently on hold as we enter our busiest sales time.
• Another client initiative has been put on hold until 2012.
• I got just plain tired.

Lessons Learned?

Can you learn from our misfortunes? Absolutely.

The first lesson is that good people are always in demand. We have also seen turnover with our clients recently. Most of the people left because of the economic conditions of the company. They were not confident that their organization was going to make it. Changing jobs was a move for self-preservation.

Others left to pursue a career direction they wanted to go after for a long time, but kept the job because they had to make money. This is a sign that the job market is loosening up a little. Even more reason to make sure that great employees stay with you.

Money is not the answer as most of these people were given special salary increases in an effort to keep them. But, the reason they started looking for another job is there was no plan communicated to them on what the company was doing to get out of the mess. Top management was so focused on the near term profitability that they were not informing their employees of longer term plans and the lines of communication stopped. Companies that were very good about communication with employees during the good times, stopped communicating during the bad times. In these cases, no news is definitely NOT good news. No news causes doubts and rumors of doom and gloom.

Inquiring Minds Want to Know

The human part of Human Resources is very fickle. Do not assume that employees just know what is going on– because they don't. Employees want to know that their livelihoods are not in jeopardy. And when things start to get quiet, the doubt gets bigger.

Your People are your Competitive Advantage

The strategic part of human resources is taking charge of the talent in the organization. Even if your organization does not have a human resources department, your organization is made up of people. Your only competitive advantage is the people you employ. So take care of the good ones and replace the not so good ones with better people.

COMMUNICATE - Let these people know what is happening with your business, where they can help and what they can do to help. You may be surprised by the response. I know I have said this before, but there is nothing more important to your business than taking good care of your competitive advantage.

Good luck and stay positive.

A Few Tidbits of Information

Better Check Your EPLI Policy

In a recent court case, (Cracker Barrel Old Country Store, Inc. v. Cincinatti Insurance Co., 3:07-cv-00303 (M.D. TN 8/11/11).  The company was left footing the entire bill for a settlement award because of the language in the policy.  The policy stated that coverage would be for employees and former employees who filed charges of discrimination.

In this case, the Equal Employment Opportunity Commission (EEOC) filed the charge on behalf of the employee. Since the EEOC was not mentioned in the policy, the insurance company got out of paying the claim.

If you are the employer, that's a big ouch.

Two Jacksonville, Fla., restaurants and owners ordered to pay more than $934,000 to 30 workers following US Labor Department investigation.

Two La Nopalera restaurants in Jacksonville and their owners have been ordered to pay 30 employees $934,425 in back wages and liquidated damages under the terms of consent judgments. The agreements resolve a U.S. Department of Labor lawsuit based on an investigation by its Wage and Hour Division that alleged violations of the Fair Labor Standards Act's minimum wage, overtime pay and record-keeping provisions.

Investigators found that kitchen employees were improperly classified as exempt from Fair Labor Standards Act overtime pay provisions and consequently paid salaries that did not include compensation for hours worked over 40 in a week. Additionally, every week, tipped employees would receive their tips plus a paycheck that together equaled the minimum wage; however, management required the employees to sign and return the paychecks, and would then cash the checks and put the money back into the restaurant. Through this process, while it appeared that the owners were paying wages, the employees actually were allowed to keep only their tips. Finally, the employers did not maintain accurate records of the hours worked by employees.

THE MORAL OF THE STORY – Don't be stupid and greedy when paying employees correctly and in compliance with the law. These employees got over $31,000.

Let us know if there is anything we can do to help and have a great October.

Bob McKenzie, President
McKenzieHR
potential@mckenziehr.com