The cost of labor is often the top line-item expense in a financial report and since minimum wage laws are drastically changing right now, the cost of labor will also continue to rise at the speed of light. What can business owners do to remain competitive and in business? You must become efficient regarding the cost of labor by using metrics related to your people – such as the cost to hire and time to fully train, as well as causes of absenteeism and turnover. You instinctively may want to stick to your old practice of immediately removing and replacing difficult employees or even hiring at the lowest wage possible in order to save a few bucks on labor. These decisions, however, affect your brand with both candidates and customers. It is very easy to access internal data from the outside thanks to websites such as Glass Door, Indeed and Vault to name a few.
While as employers, we can never 100% stop current or former employees from perceiving that their bad experience was all the employer’s fault, what we can stop – or at least get ahead of – is current employee’s perceptions by analyzing our current data and even conducting employee engagement surveys and measuring and comparing the results often. You should be looking for any changes in the results (positive or negative) and then finding a link to those changes. Is it the economy, leadership, the hiring process or perhaps your training program that is leading to these results? Whatever is going well needs to stick around while the common denominator for negative and worrisome metrics needs to be uncovered promptly and addressed.
One concern your company should dive into is if there are several employees exits which you were not expecting. Now turnover is not always a bad thing, especially if it was planned by the company. This happens when new leadership (or newly trained leadership) comes onto a team and cleans house by removing poor performing employees or those with unacceptable behavior. However, when employees who have no issues suddenly leave, an alarm must be raised. The only way you will know to raise a red flag is to regular use various HR metrics analyzed per role and location as well as department lead, supervisor or manager. Just like financial statements are vital to measure and adjust a business’s current and long-term success, HR metrics are also imperative in order to pivot and change course as needed.