Hard to swallow? Well, the evidence regarding the costs of low retention rates are strikingly consistent and shockingly expensive. Study after study concluding that the hidden but real costs of having to replace an employee ranges from 6 months to a year, or higher depending on the level of seniority and skill-sets.
The April, 21st, 2021 edition of Inside Dentistry has a highly informative and insightful piece titled ‘Retention is the New Recruiting’. It references the above, as well as outlining a prescriptive guide on how to avoid unnecessary employee defections.
Their research highlights turnover rates (U.S.) of 33% in 2019 and forecasts of future rates as high as 43% ‘within the next year’. Our metaphorical but real financial wastebaskets are filling up quickly.
Some Sobering Math
So, if we continue to treat HR and culture as soft topics, or focus more on recruiting vs. retention we’re literally throwing our money away. By the way, this retention vs. recruiting paradigm works exactly the same way for our patients, or customer base. Let’s do some hard cash math.
A practice has a dental team of 10 with an average salary of $70,000 (total salary pool – $700,000). Assume a (conservative) turnover rate of 33%.
33% turnover would amount to $231,000 of their total salary pool. Assuming the ‘replacement’ costs are 6 months, the total ‘lost’ productivity/profitability would be $115,500……..right off the bottom line.
Are there any other side effects?
Yes. High turnover is a drop-dead indicator of a culture with systemic ‘health’ issues……turnover, absenteeism, lower productivity and a prevailing, highly significant impact on team morale.
It is a wake-up call that the team can’t keep its focus and dedication to high performance excellence and loyalty……and yes, your patients will feel the vibe.
How do you gauge the state of an organizations culture?
There are many tools available, some formal and quantitative, but also qualitative. Firstly, identify who is primarily in charge of monitoring and stewarding the internal culture and employee dynamics? Theoretically, it’s the ownership, or leadership team.
But that is often not the case, due to a belief that it’s ‘really not my role, too busy, or my admin/HR staff handle employee issues’.
If the top of the ownership/leadership structure aren’t particularly skilled, or inclined to drive the organizations employee engagement process… then find someone or a small group internally who are charged with monitoring the state of the organizations culture and level of employee satisfaction and/or lack of. Allow them to develop recommendations and suggested adaptations to mitigate individual, or team-wide issues and policies before they reach the ‘exit interview’ stage.
You’ll be putting money in the bank, I promise you.
The Take no Prisoners Question
If you could ask every employee this question (privately/anonymously), you’d get a major head start on where you stand:
Question – ‘On a scale of 0 -10, how likely would you be to recommend us as a place to work for your family or friends’
There is a simple arithmetic formula for the results but simply put:
0-6 – negative promoters – ‘don’t earn their salaries’
7-8 – neutral – ‘just pay their way’
9-10 – positive promoters – ‘produce far more value than their salary’
The differential between negative promoters and positive promoters yields a score that is either negative, neutral or positive against the total employee population.
If you are below the neutral threshold, beware; neutral, not disastrous but warning signs; above the neutral threshold, good – keep your foot on the gas!
Note – Google eNPS (Employee Net Promoter Score)
Please consider the issue of employee retention as a symptom of broader internal issues, financial as well as cultural. It’s real money and overall performance excellence at stake. So when you think of your own waste basket… make sure it’s as empty as possible.