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Your Work Identity Is Defined By How Your Deal With Single Issues...

This Is What Companies Do When They Are Getting Kicked by Entry-Level Turnover...

Let's say you're an HR leader responsible for recruiting and retention in some entry-level parts of your company, and your turnover rate is the death of a thousand cuts.  Sure, you have a great retention month every once in a while (lucky! probability!), but most months are grim when you look at turnover in those entry level positions.

What do you do?  Commission a study of turnover?  Go on a listening tour?  Hire new leadership?  

You could do all of those things, or you could just write a check.  

Aetna recently decided to write the check to try and buy their way out of a turnover problem.  More from the Harford Courant:

"Aetna CEO Mark T. Bertolini told employees at a meeting Monday the company is raising its minimum wage to $16 per hour in April. It will be a pay boost for about 5,700 employees, of which 26 are in Connecticut. Most of the employees who will benefit are in Texas, Arizona, California and elsewhere. The vast majority of Aetna's 6,121 employees in Connecticut earn more than $16 per hour already.

The wage increase is partly to retain staff as the economy improves, and the cost of increasing wages is offset to some degree in other ways, Bertolini said during a companywide meeting that was video-streamed Monday from Jacksonville, Fla.

"The turnover, lost productivity and recruitment costs that this should help address are significant. I'm willing to make this investment," he said. "I hope it benefits our employees, and we will learn how it helps our overall business. That is the nature of innovation versus just managing a business."

On average, workers will get an 11 percent increase, with some seeing a raise of as much as 33 percent. For example, some workers are making $12 per hour and will now get $16 per hour. A full-time employee making the new minimum wage would make $33,280 annually.

The pay raise largely benefits call-center workers and people in billing, claims administration, health-care customer service, claims processors and health-plan-sponsor-eligibility workers who enter in data."

That my friends, is a company deciding to do something about turnover in jobs where paying a living wage matters.  At some point, you have to decide if there's a better way than just trading call center workers every 12 months with other call centers in your area by paying $10 an hour.

Let's do the math - If Aetna is giving on average a $2 increase to 5,700 employees, that equates to almost 24 million dollars annually - not a shabby investment in people and turnover reduction.  But, the last revenue figure I have for Aetna is 47 billion, which means this investment equates into .005% of revenue - a half of a percentage point.

Put another way, you now have a metric for attempting to solve your entry level call center turnover problem.  If you're a 10 million dollar company, would you spend $50,000 to reduce your turnover issues in the call center?

Play around with the numbers and make your leaders aware of the Aetna metric - it's interesting to see what type of turnover reduction investment your company is willing to make based on the size of your business.

Comments

Matt Landrum

I used to be very skeptical of the "it costs this much to replace an employee" claims, in part because the claims varied so wildly. My view NOW is that the folks in the upper-end are probably closer to the truth, especially for call center types.

Yes, there are recruiting and training costs, but what I have seen murderous is the loss of Tribal Knowledge. Front Line people dealing with customers have to know a little about a LOT of things including, "who do I go to when the customer has a technical issue? the website is hosed, the shipment went to the wrong address, when will the next rev be available? I need the user manual for this thing you don't sell anymore". It's very hard to replace that kind of knowledge.

And, do you really want to be "a pound foolish" with the folks who are talking to your customers every day?

No, I'm not passionate about this subject at all. :->

--Matt

Karen H

As a compensation professional, I would be really interested to know how raising their pay "floor" has impacted other jobs up the hierarchy. I also would be interested to understand how they arrived at $16/hr, given that $16/hr probably means something very different in California or Connecticut versus Texas. While I don't always agree with throwing money at an issue, I would agree that it's better to attract/retain higher caliber employees than continuously dealing with a revolving door and lower quality employees.

Great read with good things to ponder, as usual!

Gillian Rowley

On top of compensation is the impact of culture. I live in a mountain town in Oregon. There are employees who are more willing to take a pay cut and have a flexible, rather than a higher salary. Culture is a whole other ball game when creating retention.

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