by Roy Barker, Director – Special Projects
Your individual “Quits Rate” can actually tell you a lot about the operations of your community and also the sentiment of your workforce. The “quits rate” is a measurement published by the U.S. Labor department that indicates how many employees voluntarily quit their job. The published rate can provide some insight on the overall job market, employee sentiment, and the economy.
For years the published unemployment rate was used to gain insight in to these area. Today the calculation has gotten so murky with who is being counted and who isn’t, it does not give a clear image of the employment and economic pictures.
“Quits rates” can give us some insight into the confidence of workers to change jobs. In tight economic times when there are fewer job openings, the quits rate will drop because workers are more concerned about hanging on to the job they have due to fewer available jobs and the uncertainty of leaving their current one. Whereas, when the economy is expanding and there are plenty of jobs available for workers to move around, the quits rate will trend higher because workers are more confident about moving to different jobs and even other fields.
The published “Quits rate” for January 2014 was 1.7%, meaning 2.38 million workers voluntarily quit their jobs in January. The rate hit a low of 1.3% in 2009 and has risen ever so slightly. For the years 2000 – 2007 they averaged around 2.1%.
A Wednesday, April 2, 2014, Bloomberg article: Yellen Jobs Dashboard Shows Rate Rise Far on Horizon: Economy, says that of the nine labor market indicators that new Federal Reserve Chairwoman Janet Yellen looks at, only two have returned to pre-recession levels. So while it is unclear exactly when we will see this upturn in the economy, it will happen, but this forewarning of things to come should give forward thinking operators time to implement programs to increase retention rates.
There are definite measurable monetary costs associated with turnover. The average cost to turnover a $10 an hour employee is between $4,000 and $6,000 dollars, some estimates put it as high as $10,000. For middle managers the cost can be up to 150% of their yearly salary and executives up to 200% of their yearly salaries.
What does all this have to do with the senior living industry and your community? The sentiment is that there is pent up employee turnover that will begin to manifest itself when the economy begins to show improvement, and this could drive your employee turnover rate even higher than it already is.
In addition, the above figures do not take into account the non-monetary cost, like stress on residents and their families from seeing a stream of different caregivers and managers. There is also the stress it adds to employees left to cover open shifts and take on an increased workload just to name a few. These can lead to poor service, satisfaction surveys, reportable incidents, and less than good reviews.
Employee turnover is a very costly proposition and must be dealt with. While “cost creep” is the silent income statement killer in senior living, employee turnover is the daunting, sickening sound that will not go away. A 2013 Career Builder survey of 5,500 found that 77% of “full-time employed workers are open to or actively looking for new job opportunities.” It’s like the runaway locomotive that is loud and scary, but is expected, so everyone just moves out of the way. The unfortunate fact is that while there are strategies to slow it down and minimize the damage, most still get ran over by it.
A recent Paycom survey said the 94% of voluntary employee separations come from “push” reasons and not “pull”. Meaning something within the existing organization triggered the employee to want to leave, not an offer from another company. This means that employers can control a large amount their employee turnover.
Now is the time to take a look at your current employee turnover rates. While some turnover is necessary and healthy, don’t let unnecessary employee turnover sour your communities culture while draining your earnings and cash flow.