According to the U.S. Bureau of Labor Statistics, employee turnover is highest in industries such as hospitality, banking and finance, healthcare and the service sector. Turnover also seems to vary by wage and role of employee. For example, employee turnover of salespeople is often particularly high. This should be of critical importance to businesses because turnover is a huge expense. According to a study conducted in November, 2012 by the Center for American Progress, the estimated average cost to replace an employee in the U.S. was 16% of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year), 20% of annual salary for mid-range positions (earning $30,000 to $50,000 a year), and up to a whopping 213% of annual salary for highly educated executive positions. That means the cost to replace a $10/hour retail employee would cost a company on average $3,328, while the cost to replace a $40k manager would be $8,000. But the cost to replace a $100k C-Suite exec is a whopping $213,000. Keep in mind that the cost to recruit, hire and train new employees and the additional workload that the process puts on management and existing employees add no value to the business. It is just a loss. So employee turnover has a huge effect on profitability.
If employee turnover is so costly and generates no value, then it should be every company’s focus to keep employee turnover as low as possible. But how? And what is the right amount of employee turnover? Given how costly it is, what should the target rate be for this “wasted” cost? While zero employee turnover is ideal, it is certainly not realistic for any organization that isn’t family-owned and operated. So what is the bulls-eye on staff retention? Continue reading
Arguably, no word in the English language is more daunting and discouraging than I-M-P-O-S-S-B-L-E. It is like a giant flashing red stop sign that halts impetus in its tracks. It drains energy from any endeavor. It is just a really long word that means N-O. No, it cannot be done. No, it is not achievable. No, it is not realistic. It is the favorite word of skeptics, naysayers and negative ninnies. It renders requests as unreasonable and ideas as ridiculous. Impossible is the destroyer of potential, promises and prospects. As the word says so clearly, impossible is the slayer of possibilities.
And yet, the history of the world is littered with the multitude of things that were once thought “impossible.” Flying machines, now known as airplanes… a $706 Billion Dollar industry. Motorized carriages without horses, now referred to as cars…. A $1.2 Trillion Dollar industry. Devices that let you talk to a person on the other side of the world; the ubiquitous telephone… also a $1.2 Trillion dollar industry. Walking on the moon, which now seems quaint and dull. Image-capturing mechanisms, better known as the camera. Portable music players; first the Walkman and then CD player. And more recent impossibilities. Self-driving cars. Smart phones. Digital cameras. Hoverboards. Living in space.
The list of things once thought impossible goes on and on. Given how much of what was once deemed impossible has become possible, do we even need the word “impossible” in our vocabularies? What would it take for a person to start seeing that impossible is just one small keystroke away from I’m possible? And what might a person who thinks anything is possible be able to accomplish? Continue reading
Once upon a time, in the age-old, gritty world of business mergers and acquisitions, the focus was on acquiring companies in order to get its patents, property, products, processes, power or prestige. Think of AT&T acquiring Bell South in 2006 for $83 Billion and Exxon acquiring Mobile in 1998 for $80.3 Billion. The advertising industry used serial mergers to achieve a global presence, attain substantial influence over media, and offer a full range of marketing services to international clientele. In some cases, corporate acquisitions have been used to keep patents out of the hands of those who might be tempted to assert them against a mega corporation. But, while companies still want to acquire innovative institutions and inventive ideas, corporate acquisition efforts have taken an odd and interesting turn in the 21st century. Instead of buying the competition’s better widgets or customer base, today’s mega corporations are acquiring companies just to get its employees.
Big business has begun acquiring companies – sometimes lackluster startups — just to get the staff who work there. The world of corporate acquisitions has expanded into the realm of recruiting and HR. It is perhaps the ultimate confirmation that a company’s greatest assets are its people. But this approach is now becoming a common – if not a common sense — approach for tech giants fighting to hire the most brilliant leaders, engineers and programmers in the world. The real question is whether this approach to talent acquisition is effective and can it work for other industries too? Does it make sense to spend money – sometimes big money — buying a company in the hopes that the talent will stay long-term? And does that mean, in essence, that companies are selling “human talent”? Continue reading
The idea that there is still gender disparity in compensation and opportunities in 21st century American business may seem ludicrous to some. After all, there are some very powerful women leading some of the world’s biggest companies. Mary Barra is CEO of General Motors. Ginni Rometty is CEO of IBM. Indra Nooyi is CEO at Pepsico. Marilyn Hewson is CEO of Lockheed Martin. Safra Catz is CEO of Oracle. And beyond Fortune 500 companies, there are female trailblazers such as Arianna Huffington, founder of the Huffington Post, Sheryl Sandberg, COO of Facebook, Jill Abramson, Executive Editor of the New York Times and Oprah Winfrey, creator of O Network. These women are not just successful, but the companies they lead represent a cross-section of business sectors from aviation to automotive to technology and beyond. But the real story is in the numbers. While the 2016 Fortune 500 list shows that 21 companies have women CEOs, those are fewer than the 24 female Fortune 500 CEOs in 2014 and 2015. More importantly, of the 29 companies that were added to the Fortune 500 list this year, only one had a female at the helm. The decline in female CEOs in the Fortune 500 this year is due to retirements, mergers and other factors that had nothing to do with gender or the quality of their leadership. But, with so few females to begin with (just 4-5% in all), any loss of female representation at the top is more noticeable.
The real problem is that while some women have moved to the top of their fields, they are few and far between and there aren’t many other females following in their footsteps. This lack of female leadership is found not just in business, but also in government, sports, judiciary, higher education/universities, and beyond. And this imbalance can be found at every level and bleeds into compensation practices and workplace policies that are unfair or unfriendly to women. There are steps businesses can take to rectify these issues and create workplaces that are fair and equitable to both genders.