This past week, I had an opportunity to spend a few days in Key West with the good folks at NFFS. For those of you not familiar, that stands for the Non-Ferrous Founders Society. The people in the room were all owners or operators of foundry operations around the country. The almost 100 people in the room had a simple question: “How can we improve our retention and development of current great employees?”

While I spent 90 minutes with them giving them some new ideas that can change their staffing going forward, I first had to get their attention.

The first step for me in addressing any staffing issues is to identify the cost of doing nothing different. Why? It’s because if the pain of not acting isn’t represented on the P/L statement…nobody is going to take it seriously. If they don’t have to defend a negative number on the P/L each month to the board of directors, owners or stockholders, it will not make it to the top of the “to do” list.

So here is an exercise for you to start with when addressing this issue. According to my latest research, SHRM suggests that it costs AT LEAST 40% of an employee’s annual salary to lose and replace them. This includes finding their replacement, training them, losses in productivity during the switch, and errors and omissions that may occur during the changeover. So now, the cost is easy to calculate. For example, each $50,000/year employee you lose and have to replace has direct and indirect costs of $20,000/year. If your organization turned over 10 employees this year, then you had a retention cost of $200,000 last year.

Now, if your organization was faced with a $200,000 safety issue this year, how would you be reacting to it? If you had a $200,000 quality complaint on your desk from your largest customer, what time and resources would you employ? Are you WILLING to focus to make that issue go away for good?

Here’s a place to start: The two most critical dates in a new employee’s experience are the 91st day and the end of their third year of employment. Want to know why and how to fix it? Drop me a line and let’s talk.

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