Improve Profitable "ROE" with RetentionWritten by Phil McCutchen
"R.O.E.: Return On Employee -- A measure of corporate business performance as determined by gross revenue achieved per staff employee."
by Phil McCutchen Marketing Manager, VCG, Inc.
As definition above points out, ROE (Return On Employee) focuses on your staff, people who generate revenue that makes your operation profitable. For any business with above-average employee turnover, ROE is a critical component of success that is too often neglected by management. For purposes of this article, we'll focus on staffing industry; temporary employment and recruiting agencies that provide important personnel-related services to business community, yet typically suffer from above-average staff employee turnover. We will show you challenges and offer some tips and techniques to improve turnover situation and thus, ROE. In our analysis of available operational data, average ROE for commercial staffing firms is a bit under $400,000. We've also seen some firms (many of them VCG staffing software clients) with ROE's that exceed that by 50% or more. Why do some staffing and recruiting firms settle for average or less, while others excel? One key to success is staff employee retention. According to data from ASA 2002 Staffing Industry Compensation Survey by Mercer Human Resource Consulting Inc., average annual turnover for staffing industry jobs was 48 percent. In fact, in previous years, turnover was as high as 70% for some positions. As might be expected, impact of such high staff turnover -- for whatever reasons -- can be tremendous. One case study in "Continuity Management" by Hamilton Beazley, chairman of Strategic Leadership Group, an Arlington, VA-based consulting firm, pointed out potential cost with this true story. A large company delayed a major product launch by nine months as it struggled to resolve a technical issue. The delay allowed a competitor to introduce a similar product first, gaining a competitive advantage among customers. As a result, firm's product never reached its projected volume and revenue potential. In investigating launch, it was discovered that solution to technical issue that caused delay already existed as firm's intellectual property based on research that had been done 15 years earlier! Knowledge of that research was lost due to staff turnover. Total cost to firm in duplicated research and lost revenue was $1 billion. Similar losses happen on smaller scales every day, and that includes your staffing firm -- all because 'head knowledge' was lost. Such quantifiable losses however, are just most easily quantifiable part of problem. Among more obvious issues of turnover are: •Loss of morale among remaining staff members, leading to reduced productivity •Increased 'Ghost Work', i.e., remaining staff taking on burdens and tasks of departed staff, which can also be stressful and demoralizing •Loss of revenue directly or indirectly attributable to loss of staff •Cost burden related to recruiting and training of replacement staff •Loss of tacit 'head knowledge' and experience. According to Boston-based Delphi Group, tacit knowledge represents some 70% of an employee's knowledge base. It includes knowledge about those they consult and discuss business with, company culture and operations experience, and unique experiences in business that lead to innovation Planning An Employee Retention Program Recognizing that employee retention is important is easy enough. Doing something effective about it requires both strategic thinking and smart tactics, especially for staffing firms. Temporary staffing and recruiting firms may justifiably pride themselves on their intimate knowledge of human relationship management, but may also expend much of their efforts on clients and temporary or contract employees instead of their own staff. Changing that focus will change your business and its productive profitability big time. Let's start with strategic planning factors: •First, be aware that employee needs differ from management's. They typically don't have 'ownership', and so their motivations are markedly at odds with what management believes they want. According to a number of surveys done over past 50-plus years, top ten things employees want vs. what managers 'think' they want are: Top 10 Things Employees Want vs. What Managers 'Think' They Want FACTORSMANAGERSEMPLOYEES Full Appreciation for Work Done81 Feeling 'In' on Things102 Sympathetic Help on Personal Problems93 Job Security24 Good Wages15 Interesting Work56 Promotion/Growth Opportunities37 Personal Loyalty to Workers68 Good Working Conditions49 Tactful Disciplining710 Sources: Foreman Facts, Labor Relations Institute of NY (1946); Lawrence Lindahl, Personnel Magazine (1949). Repeated with similar results: Ken Kovach (1980); Valerie Wilson, Achievers International (1988), Bob Nelson, Blanchard Training & Development (1991), Sheryl & Don Grimme, GHR Training Solutions (1997-2001) •Second, acknowledge that employee retention is great for business. A recent survey conducted by Gallup organization researched Impact of Employee Attitudes on Business Outcomes. They found that organizations where employees have above average attitudes toward their work (that is, high employee satisfaction), have: o38% higher customer satisfaction scores, o22% higher productivity, and
It Can Happen To You Written by Jane Langdon
The dot com business is alive and well for those wanting to pursue it. What if you don’t know how to use a computer? Can anyone have twenty successful businesses on internet in four years? Six years ago Jane Langdon did not know how to turn on a computer. Today she has twenty successful internet businesses. You can too.
It all started because her favorite perfume was discontinued. Jane started to study chemistry and learn internet so she could read everything written about perfumery. She bought a computer and taught herself how to use it. Finally she mixed a perfume. People began to ask her what she was wearing. So she started an internet business, House of Rose, with one rose perfume. Today she has more than 55 long lasting, non alcohol perfumes at www.houseofrose.com.
She then had a copy of a Chanel suit made by a seamstress for a trade show in New York City. So many people wanted to know where she got it, so she started her second business, Sew Beautiful By Natasha and Jane. They make custom couture suits, dresses, evening gowns, pageant and bridal attire at www.sew-beautiful.us.
The now famous poncho that Martha Stewart wore upon her release from Camp Cupcake can now be yours. Made for her as a going away gift from a fellow inmate, it has become known as “Welcome Back” poncho. The woman who made poncho, Xiomaro Hernandez, will get 10% of profits after her release from Alderson in 2008. The site is www.sew-beautiful.us/marthastewartponcho.
Want to browse unique fashion items on internet? . A Passion for Fashion has lovely charms, blouses, shoes, handbags and more for sale. Each month items change so you will always be informed of newest delights at www.sew-beautiful.us/passionfashion
Soon some of her friends asked her to help them put up an internet site because they liked her businesses and wanted to start their own. After she helped them, she decided to offer her services to others and started Your Net Store www.sew-beautiful.us/yournetstore.
Her sister-in-law has Parkinson’s Disease and her biggest problem was taking her medications on time. She asked doctor if there was a system to help her sister-in-law and he said no, but would gladly welcome one. Pill Proof at www.sew-beautiful.us/pillproof solved problem of medication compliance.
Jane had met her husband ten years ago through a personnel dating service and always felt they could be improved on. Friends said she had good advice about how to approach this new way to meet people. She decided to start a very selective marriage service that included questions to 101 important elements for a good match. See Hopeful Romantic at www.sew-beautiful.us/hopefulromantic.