Employee Turnover

The national average for employee turnover in all businesses in 2006 was about 23.3%, (see chart below), and the national average for retail was 34.7%.

Some turnover is healthy for the organization, bringing in new ideas, and fresh attitudes as more senior employees move on to seek more financially and emotionally rewarding careers.

So what’s the deal with Wal-Mart?  In my area, (Louisville, Kentucky), the stores have between an 85% and 104% employee turnover rate!

I’ve read some of the bad press Wal-Mart has gotten, and can understand an above average turnover, but 104%?  Something’s wrong.  I was told by two different managers that part of the problem is that they hire a lot of students, and students traditionally don’t stick around too long.  OK, I understand the student argument, but I rarely see young people working at Wal-Mart when I go in.  I see them working in the grocery store, and working at the fast food joint, but not working at Wal-Mart.

Another drawback is that Wal-Mart only hires part-time employees.  By keeping their workers at part-time they don’t have to offer benefits so I’m sure some people have left because of that.

But excessive turnover = bad management.  If you have high turnover in one department then the problem is probably the department manager; if the problem is company wide, (as in Wal-Mart’s case), the problem is at the top.

According to different articles I have read, the cost of hiring and training a new rank-and-file employee is around 25%, (some gave a higher percentage – 25% was the lowest), of their annual wage; higher management positions have a higher training cost.

So, if a Wal-Mart store has 200 employees, and 150 are “Associates”, and a turnover of 100%, and the average wage is $8 per hour, and the average number of hours worked is 30 . . . (let me get out my calculator) . . . that means the store is losing $468,000 a year just to train new employees.

Even at a 50% turnover the $234,000 annual loss times several thousand Wal-Mart stores is millions of dollars.  That’s millions of dollars wasted because of poor management.  Trying to save a dollar on health benefits and/or pay is costing them a lot more IMHO.

Not that Wal-Mart is going to listen to me any more than they listen to any of their other critics.  The solution is simple; treat the employees with more respect and courtesy.  As I understand it, when Sam Walton ran the company it was more enjoyable to work there, and in deference to Wal-Mart, every employee I’ve talked to has said they like working for the company.  And I’m talking people on the floor that I just strike up a conversation with.

A full-time employee is less likely to leave the company and would thus improve their employee turnover rate.  Yes it will cost the company more per individual, but I am confident that expense will be more than equaled by the reduced training costs.

Turnover rates of 85% to 104% are inexcusable as far as I am concerned.

That’s my 2 cents.