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December 1, 2006

3 Min Read

Regardless of business type, most of us have employees with varying skill sets. At the lower end of the employee pool are those with less education or abilities, the hourly worker. Entry-level employees are thought to be the most mobile segment of our team stay the shortest period and receive the least training. Businesses dont want to spend too much on them because their investment will soon be walking out the door.

Yet, in a service business, hourly workers are the backbone of the business. High turnover is just plain expensive. Those who suffer the most are our customers and ultimately ourselves!

Cost of Turnover

What is the cost of high turnover? Lets assume youre running a full-service car wash. You operate 10 hours a day and normal productivity is 1.5 cars per man hour; daily staffing is 10, plus a manager and cashier. If everyone shows up, life is beautiful. When they dont, productivity declines, wash quality suffers, customers turn off your property.

If you are open 300 days a year and this event occurs 10 percent of the time, you are at risk 30 days. Lose 15 cars a day at $20, and youre saying goodbye to about 9,000 dollars annually, not to mention the residual effect. Dissatisfied customers cant wait to spread the word. The impact of high turnover and untrained, unmotivated employees is huge.

Happy Deal

Not long ago, McDonalds ran an ad showing celebrities, politicians and other well-known personalities who got their start in life working at the burger restaurant. Wouldnt it be great if we could create the same atmosphere, loyalty and grounds for testimonials in our business?

Disney and Starbucks are examples of two companies that recognize the importance of providing valuable opportunities for their employees. In the case of Starbucks, every employee is offered health insurance, a perk almost unheard of in companies with hourly, part-time labor. And guess what? Starbucks stock performance, earnings and growth have been meteoric!

So how can you provide an environment that keeps employees engaged? Consider a recent article from the Harvard Business Review, Putting the Service-Profit Chain to Work. The authors, who are Harvard business-school faculty, talk about the relationship between profitability, customer loyalty and productivity.

The links in the chain are described thus: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by loyal and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.

As the article points out, CEOs of exemplary-service companies emphasize the importance of each employee as well as the customer.

Your staff members basically want the same thing as your customers. To find out details, survey your employees the same way you would clients. Studies show they will likely be concerned with the internal quality of their environment: how they feel about their jobs, colleagues, support and direction from management. Other important factors are rewards, job design, recognition and the tools for serving customers.

Employee satisfaction is good business. Companies that implement a strong employee- and staff-satisfaction program have raised the bar. Those who continue to neglect the spine of their businesstheir workforcewill surely struggle. 

Fred Grauer is president of Grauer Associates and executive vice president, investor market and conveyors, for Ryko Manufacturing Co., a car wash equipment manufacturer in Grimes, Iowa. He has made a lifelong career of designing, selling, building and operating car washes. He can be reached at [email protected]

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