Archive for the ‘HR Software’ Category
Business Intelligence in Action: Employee Turnover
Measuring the impact of voluntary employee turnover is a great example of how business intelligence can be investigated at multiple levels. In a high-turnover environment such as retail or a customer service call centre, single percentage point reductions in retention rates can have a significant impact both on operational performance and the bottom line. But even if they’re able to measure turnover accurately – and given the difficulty many large enterprises have in establishing current headcount, that in itself shouldn’t be taken for granted – most organisations have tended to assess it in relation to historical patterns and industry norms.
While it’s useful to know whether turnover rates are climbing or falling, this kind of information is really only an indicator that problems exist, and – if the information is broken down by geography or business unit – of where those problems occur. Equally important is to find out which types of employee turnover cause most pain to the business, so that retention programmes can be prioritised. One approach is to take a selection of employees from different parts of the business and build an impact profile for each of them, assessing:
- Total cost of recruiting a replacement comprising
- Direct external expenditure (advertising charges, agency fees etc)
- Internal costs (e.g. cost of HR and management resource allocated to recruitment)
- Opportunity cost where relevant (e.g. in diverting a sales manager’s time from customer-facing work to recruitment)
- Training costs, including cost of structured training, plus an allocation for the management and peer-level resource required for “on the job” education
- Allocation for reduction in productivity – Productivity usually declines as soon as an employee resigns and begins to work out their notice period.
The broader business impact assessment would include:
- Direct business impact – For example, the departure of a senior manager in product design may slow a development project and delay product release, impacting sales and marketing strategy and delaying revenue generation
- Loss of employee knowledge and experience – This is hard to put a figure on, but it should be possible to factor in the impact on tangible outputs (such as sales), and perhaps measure softer factors such as customer or partner relationships on a sliding scale of risk
- Impact on team morale
The end result will be a series of comparative analyses looking at multiple impact factors, which provide a context for targeting retention initiatives. As with each of these kinds of analytical exercises, the aim is to provide indicators and parameters – it’s not necessarily a comprehensive audit.
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