Many large organizations with a large workforce have turnover to match…often 30% to 40% or higher. The business could be retail merchandising, big-box warehouses, field sales, call centers, whatever. The type of organization is not important. What is important is: Large workforce; Unacceptable turnover; and a computer full of biographical data.

What's the Cause?
There are many causes for high turnover. On the organizational side I have seen low wages, poor management, poor benefits, planned turnover, bad working conditions, and so forth. On the personal side I have seen wrong jobs skills, low motivation, and unrealistic job expectations.

Turnover problems can be complex and difficult to pinpoint, especially for large organizations. However, regardless of the turnover percentage, as long as a substantial number of people do stay on the job there is a strong possibility that turnover can be reduced using a few analytical tools.

What's the Cost?
What's the big deal about turnover expense? It can be staggering. Some professionals estimate turnover costs from 100% to 700% of an employee's salary depending on the position. I'll be more conservative: think of somewhere in the range of $10K per terminated employee.

At $10K per employee, a company with 1000 people in a position experiencing 30% turnover would be losing (at a minimum) $3 million annually. It does not take a CPA to explain how this expense affects solvency.

How can reducing turnover help? Just a 5% net turnover reduction (from 30% to 25%) translates directly into a "no-sweat" profit increase of $510,000. At a typical 10% profit margin it would take almost most $30 million in additional sales to deliver the same effect. So, which do you think is easier to accomplish?

Why Not?
In practice, there are almost as many reasons for not solving the turnover problem as there are issues causing it. The usual reasons are: 1) no one has crunched the numbers; 2) responsibility for turnover is diffused; 3) no one knows what to do, or 4) there is no money in the budget to fix it.

To be fair, turnover and productivity calculations are often complicated. While line managers are busy producing products and services, HR often has an "administer the benefits and process the paperwork" mentality. As such, HR often misses entirely the opportunity to make a real financial contribution to the bottom line. Meanwhile, every employee is expected to provide value. But it is easy for a company to hemorrhage cash when nobody is held accountable for underperforming employees or high turnover.

But to say there's no money? You've got to be kidding! Any company where no one can make a simple cost-benefit argument to save $500,000 deserves to be liquidated.

The Bio-Data Solution
As we said before, there are many reasons for turnover. But assuming the company is not simply a horrible place to work, a solution can often be found hidden in the HR database.

Using the principle of "past behavior generally predicts future behavior" we can hold a short meeting with managers; assemble a tentative list of biographical items that might predict turnover; analyze the relationship between the biographical items, retention and turnover; and use this information to predict retention for new hires.

• If the employee had prior experience using their car as an office,
• and they had more than five years prior work experience,
• and they scored "65 or above" on generating new ideas,
• and their interpersonal skills were maximum,
• and their competitive drive on the hiring test was 25 or lower,
• then,
  there is a 95 percent chance they will be employed.

While, rule #2 (for termination) was:

• If the employee had average experience in maintaining accounts,
• and had more than five years' prior work experience using their car as an office,
• and their total work experience is four or five years,
• and their competitive drive on the hiring test was 25 or lower,
• and they scored 72 or above on a teamwork scale,
• then,
  there is an 83 percent chance they would be terminated.

Conclusion
If your organization is lucky enough to have a large workforce and unlucky enough to have high turnover, you have a problem to solve. So, get smart and mine your biographical data for clues to retention and termination. Once you have a set of hiring rules, you can use them to make new hire decisions.

Who knows, you might save enough to avoid being outsourced.