TROUBLE WITH STAFF CHURN
For employers, the orthodox belief is that the flexible labour market
is wholly beneficial, allowing them to respond to changing market conditions
at will. But staff churn - the rate at which old employees
leave and new ones arrive - is now above recognised danger
levels in many industry sectors, imposing uncomfortably high rates of
jobs disruption and the single biggest source of know-how leakage out
of companies. With the former undermining the benefits of continuity,
the latter imposes a corporate amnesia that reduces the ability of organisations
to learn from their experiences. The result? Poorer decision-making
and a conveyor belt of repeated mistakes, re-invented wheels and other
unlearned lessons, the domino effect of which reduces productivity and
competitiveness. It's an iceberg-like problem.
As a rule organisations think that the acquisition of other employers'
experiences - hiring - is substitute enough for any downside consequences
of their 'musical chairs'. Whilst a regular flow of new
appointees does allow the importation of new ideas, the trouble is that
others' experience is not always relevant. An organisation's
experience is institution-specific. It marks the establishment's
unique capability and is arguably the most important ingredient of its
durability. As such it cannot be re-hired, with new appointees generally
expected to assimilate it by osmosis. With a high staff churn, the learning
curve - as well as the ability to organically learn from in-house experiences
- is all over the place and consequently long, steep and expensively
The trick is to be able to take on board others' experience without
losing the benefits of one's own tried and tested practice. Given
that organisations have already paid for their experiences, probably
many times over, why pay again, and again and again?
If one accepts that progress is mostly incremental, one's experiences
need to be managed - just like any other corporate asset.
YOU HAVE A CHURN-RELATED PROBLEM?
To determine this, consider the following ....
- Productivity: The best measure
of corporate performance is output per head. To calculate productivity,
divide sales by your employee headcount on a departmental, regional
or group basis. Is your calculation below your main competitors?
- Employee churn: Although
there is some industry variation, the recognised danger level for
staff turnover is 15% per annum. Are you above this level? Alternatively,
calculate the proportion of employees with less than one year's
- Blunders: Is firefighting
- Project completions: Are
projects constantly over budget and/or overdue?
- Accurate recall: Do your
main decision-makers have short and selective memory recall of events?
- Defensive reasoning:
Do your executives deny making mistakes without evidential prompting?
- Ability to impose change: This
is not something that can be measured precisely. But does change
take longer than your competitors?
- Re-inventing the wheel: Do
you find that you repeat work already done?
'Yes' answers would
affirm that Pencorp can help.