Earlier, I mentioned starting a job on March 12, 1996, that I thought would get me through college and how much that organization invested into hiring forty of the one thousand or so candidates who applied. I didn’t share how much of that investment came during the first two weeks we were on the payroll. The company certainly had a lot of time and money tied up in the process before we ever set foot on the property: several rounds of off-site interviews, competency testing at the local tech school, background checks, and drug screens—which shouldn’t be confused with “drug testing” because testing drugs was a bit more taboo back then. That all carried a hefty price tag, even back in the ’90s, but not nearly as much as the organization invested by having all forty of us go through two full weeks of orientation!

At that point, the starting wage for hourly positions at that facility was $9.48 per hour before factoring in any of the benefits—some of the best in the Shenandoah Valley at the time. They paid each of us almost $1,000 to sit in training rooms for two solid weeks, some of which covered the processes and procedures we’d soon be expected to follow to the letter. Still, there was just as much face time with the local management team.

I won’t pretend like I remember the majority of the material that was shared over the course of those two weeks. My point here isn’t to make a case for whether or not that much time was necessary. But I do remember like it was yesterday the impression the plant manager made with us from day one and how he walked the talk for the next few years until he retired. What stood out the most to me was his focus on the importance of safety, his making sure we knew he was always approachable, and his emphasis on paying little attention to the rumor mill. Regarding rumors, he assured us we’d hear at least one every day and said we should start one of our own if we didn’t!

While joking about us starting rumors, he was incredibly serious about safety and how approachable he was. I saw him on the shop floor interacting with the off-shift crew I was part of more in my first month than I had seen the construction foreman at the job I came from in the entire year I worked there—and that foreman was only responsible for the six or eight of us on that one crew.

Fast-forward to late 2013 and most of 2014. I was doing almost all the hiring for that facility I started with in March of 1996. At that point, the amount of time we were given to complete all the new hire paperwork, cover all the rules and regs, and introduce the new employees to our safety and quality processes was limited to just four hours. Those new team members spent the rest of their first day engaged in something similar to what they were hired for. I’m still not making a case for whether the time for the orientation process was good or bad. Still, I will challenge you to consider which version of orientation in that same facility provided the new folks coming on board with more exposure to the local leadership team. Since I’m too impatient to give you much time to guess, I’ll lay it out for you! During my final eighteen months with the company, when I hired around 225 people, I don’t remember a single instance where the plant manager even said hello to one group of new employees. To that end, the only managers who were regularly involved in the orientation process were the safety manager and the quality manager, both of whom I consider close friends still today—which is likely tied to the fact that they gave a crap about the people we were bringing into the organization…

Here’s one more question: If you worked in that facility under both of those management teams, which would you be more likely to recommend to your friends or family as a place to consider when they were looking for employment?

For more on this, you're welcome to reach out to us directly at admin@dove-development.net to get a 45 Day Trial Access to our COMPLETE Leading At The Next Level program or you can check out Wes's recently released book, What's KILLING Your Profitability? (It ALL Boils Down to Leadership!) that was a #1 Best Seller on Amazon!

Having just wrapped up our look at how high turnover kills so much of an organization’s profitability, it makes sense to shift our focus to the costs involved with recruiting. If we can provide our best team members with a solid reason to stay, the pressure to add anyone with a pulse to the team should be nearly nonexistent. But any time we have to fill a critical role, attracting great candidates comes with a high price tag! As we take aim at this profitability killer, we need to come to terms with what the total costs are (because most organizations don’t capture nearly all of them) and how having a strong leadership culture improves the entire process. Then, we’ll tie it all together with some steps any leader can take to develop a strong pipeline of future team members.

For more on this, you're welcome to reach out to us directly at admin@dove-development.net to get a 45 Day Trial Access to our COMPLETE Leading At The Next Level program or you can check out Wes's recently released book, What's KILLING Your Profitability? (It ALL Boils Down to Leadership!) that was a #1 Best Seller on Amazon!

The high cost of turnover shows up on a balance sheet because it’s a considerable profitability killer. Still, a company’s bank account isn’t the only thing that takes a hit when great team members are making conscious decisions to jump ship! Just as top-down leadership and poor communication play a part in so many other areas of how a business operates, high voluntary turnover impacts far more than just the need to stick a NOW HIRING sign along the street in front of the building…

An article I found on Indeed.com called “Hidden Employee Turnover Costs: 7 to Consider” lists these:

• The hiring process
• Onboarding and training
• Productivity
• Engagement
• Morale and company culture
• Work quality
• The time the role is empty

In far too many cases, the only costs I’ve seen organizations consider with turnover are those tied directly to the hiring process—and even then, it’s usually just the expenses that have been paid to an external source: a recruiter, a newspaper or hiring platform, the background check and drug screen fees, etc. I’ve rarely seen a company calculate the internal costs tied to the time invested in creating the job post or screening candidates. Those two alone can be significant even before considering the other six on that list.

In the fourth lesson of our Recruitment, Retention, & Culture course, we cover the importance of a robust onboarding process (not to be confused with the few minutes many businesses dedicate to what they call “orientation” on an employee’s first day) and the financial impact effective onboarding can have, so I won’t hash all of that out again here. We’ll also go into specific detail later on, showing how much profitability is killed by poor engagement and low morale. Just know that high voluntary turnover weighs heavily into both. Right now, let’s stick with how this particular profitability killer spills over into productivity, work quality, the impact of an empty role, and how those things always reach the customer we’re serving.

In our Leading At The Next Level program, I shared a lesson where I cited statistics about the time it takes for a new employee to be profitable. In short, the study I referenced showed that the break-even point for an organization hiring someone new was usually around six months, meaning that that team member was costing the company money until that point—just on their individual productivity. There was even more cost involved when you consider that anyone training them also lost productive time.

Additionally, which employees are most likely to make quality-related errors? I realize this is part of the training curve, but it still comes at a cost… These mistakes lead to work being redone in the best-case scenario, the product being scrapped in many cases, or even an inferior product or service reaching our customer—which generally has a far higher long-term cost than either of the other possibilities!

So what about costs related to the role being empty? Depending on the role type, it could take weeks or even months to find the right person in the best of times. But when voluntary turnover is already high, this is even more difficult and tends to stretch the time out even longer. What happens to the work during this time? If you’ve ever been in a salaried role and had several weeks of paid time off left over at the end of the year, you know where I’m going with this; the work still HAS to get done… As salaried employees, we take it with us on our vacation or don’t take the time off. When a critical position is empty, that work lands on someone else’s desk—someone who already has a full plate. Sometimes, those folks absorb it by working extra hours, but other times, things fall through the cracks. Either way, this is an added cost of turnover that hardly ever gets captured.

Unfortunately, it doesn’t stop there. Let’s look briefly at how this can impact our work performance and the overall company culture before unpacking specific ways to give our best team members a reason to stay.

For more on this, you're welcome to reach out to us directly at admin@dove-development.net to get a 45 Day Trial Access to our COMPLETE Leading At The Next Level program or you can check out Wes's recently released book, What's KILLING Your Profitability? (It ALL Boils Down to Leadership!) that was a #1 Best Seller on Amazon!

Over the last several years, I’ve frequently referenced this study:

According to a Gallup study, “The U.S. Bureau of Labor Statistics has found that the U.S. voluntary turnover rate is 23.4% annually. It’s generally estimated that replacing an employee costs a business one-half to five times that employee’s annual salary. So, if 25% of a business’ workforce leaves and the average pay is $35,000, it could cost a 100-person firm between $438,000 and $4 million a year to replace employees.”

While I believe that alone makes a strong point about how expensive turnover is in an organization, the cost of high turnover can be so much more—and that’s the next profitability killer we’ll address!

Nearly every time I’ve shared that with a group of leaders, I’ve challenged them to consider how even the most conservative numbers in that quote impact the profitability of their organization. Still, this only captures part of the picture. First, let’s consider how much a company’s average wage is today since the minimum wage has nearly doubled in the last two years—going from $7.25/hour to $12/hour in Virginia as I share this, with $15/hour being the widely discussed target that’s likely to be achieved sooner than later. Now let’s factor in the combination of the Covid pandemic and the “Great Resignation” that’s resulted in Help Wanted signs at just about any business we drive by or walk into on any given day. At the risk of having a flag thrown on me for piling on, think about companies like Sheetz or Walmart offering $17-18/hour as a starting wage for full-time positions combined with the significantly higher minimum wage, which all but forces companies to increase even the entry-level wage for skilled and semi-skilled roles that had been between $14-$17 per hour as recently as 2019. Oh, and we can hardly pretend that all this doesn’t spill over into every other pay range up the company ladder!

I’m convinced that $438,000 for a 100-person company, the low-end referenced in that now-dated Gallup study, no longer exists. When I see starting wages for full-time retail positions at or above that $35k annual salary in the sleepy (and beautiful) Shenandoah Valley, where the cost of living has traditionally been way lower than the larger metropolitan areas only an hour or so away, I have a tough time imagining many organizations maintaining an average salary under $50,000. And everything I’ve hit on to this point has been tied to those BLS norms. So just how much is the cost of high turnover, and how can we capture the profit it’s killing?

Before we begin working through any of that, though, let’s ensure we’re on the same page with exactly what turnover I’m referring to—because it ain’t all bad! Let’s be honest; there are times when turnover is necessary. That doesn’t mean it’s not difficult or there’s no cost involved. Still, every business will have situations to deal with where performance isn’t where it should be, or someone isn’t aligned with the culture or values. And occasionally, we get to celebrate a team member’s retirement… We won’t be addressing either of those. The turnover I’ve always been most focused on minimizing, regardless of how high it is, has been the voluntary kind, the kind where a great team member chooses to leave, and it could have been prevented. I believe that’s a significant profitability killer, and two of the things we’ve addressed recently—top-down leadership and poor communication—play a role in driving our turnover percentage up.

For more on this, you're welcome to reach out to us directly at admin@dove-development.net to get a 45 Day Trial Access to our COMPLETE Leading At The Next Level program or you can check out Wes's recently released book, What's KILLING Your Profitability? (It ALL Boils Down to Leadership!) that was a #1 Best Seller on Amazon!

Once we’ve come to terms with just how high the cost of poor communication can be and how any poor communication skills in our organizations add fuel to other fires that are killing our profitability, we have plenty of reason to address the lack of communication between our managers and employees. Let’s be honest, though: if doing it were as simple as saying it, would there be any need to discuss it here?

We’ve already worked through many of the effects of poor communication in the workplace, so I won’t hash them all out again now. What I will do, though, is suggest that I’m not sure I’ve ever met someone who wanted to communicate ineffectively with their team—or anyone else for that matter. All too often, I believe it simply boils down to not having the right tools for the job (or even knowing those tools exist)!

Most everyone I know is familiar with some variation of the Golden Rule: do unto others as you’d have them do unto you. Truthfully, our society would have much less crap going on if we all did a better job of following it. But while the Golden Rule may solve many of the issues we see in the headlines on any given day, breaking it may be just what we need to address the profitability killer of poor communication.

One evening several years ago, I received a text message from my son asking, “How do I get people to do what I tell them to do?” He was working second shift in a manufacturing facility at the time, and it was his first evening filling in as a backup lead for the assembly line he had been part of for a couple of years. I answered, “Call me tomorrow morning, because that’s not something I can answer in a text.”

When he called the following morning, the first thing I needed to know to have any hope of providing him with solid feedback was why he was asking: did he have team members who weren’t doing what they were required to do, or did he believe they were capable of accomplishing more? He was quick to explain that the line team was great! He said they were already the most productive on the shift, but he felt like they could do even better, and he wondered how he could bring that out in them.

As a dad, I still get excited all these years later when I think back to that conversation. The fact that Matt, in his early twenties at the time, saw more potential in his team and wanted to learn how he could bring it out in them was something I just haven’t seen very often. But getting the results he was hoping for from “having them do what he told them to” wouldn’t be as simple as making a blanket statement to them all at the beginning of the shift. Only a few of them would have responded positively to him if he had communicated with them how he wanted to be communicated with… Like me, Matt is pretty direct and to the point. He thrives on being challenged and will go out of his way to accomplish a task, especially if someone doesn’t think he can!

Matt could have taken that approach, but I’m positive the results wouldn’t have been anything close to what he hoped for. Instead, we discussed how he could break the Golden Rule with each team member and do unto them as they would want rather than how he would want. Because I knew each of the folks working with him, I was able to give him specific insight that helped him achieve the goal in his initial text message. I was also able to provide him with a simple approach for doing the same thing with anyone else moving forward. He was excited to put it into practice; it was just a matter of understanding how.

For more on this, you're welcome to reach out to us directly at admin@dove-development.net to get a 45 Day Trial Access to our COMPLETE Leading At The Next Level program or you can check out Wes's recently released book, What's KILLING Your Profitability? (It ALL Boils Down to Leadership!) that was a #1 Best Seller on Amazon!

The cost of poor communication is impacting enough organizations that it’s become quite a hot topic. I found a separate article on Inc.com called “Costs of Poor Communication Reach $37 Billion. Avoid Disconnects by Implementing These Two Things” that referenced the same study I shared before, citing the average loss of $62.4 million per year to the 400 companies for 100k employees. Still, this Inc. article shared another piece I had yet to see from the study. That same study showed that “companies with leaders who possess effective communication skills produced a 47 percent higher return to shareholders over a five-year period.”

It’s one thing to see stats pointing to how much profitability is being killed by issues like this. However, seeing how organizations that do these things well are capturing that lost profit can give even those of us who have struggled the most a glimmer of hope! While I’ve seen what a large role communication plays in every working environment, I’ve been a part of, I’ve also seen how many other things are impacted by communication, for good and bad. And it doesn’t only apply to the business world.

Since late 2019, I’ve written a monthly column for a local newspaper about effective communication. The most significant difference between that column and most of our work, though, has been its focus on how communication builds (or tears down) personal relationships just as much as business relationships—and the profitability businesses need to remain sustainable. Regardless of where we communicate, the connections become stronger or weaker based on the energy we invest. And that communication fuels quite a few other fires, for good or bad!

My goal for that newspaper column has been to provide a resource for the folks who read it that helps them enjoy better relationships with their friends and family members, the people they interact with most frequently. The same tools I share in the column apply at least as much in the business world, because the relationships we build with the teams we lead have direct ties to the ever-important profitability we’ve been looking at here.

When we’ve built strong relationships with our teams and communicated with them clearly and consistently, we become likely candidates for experiencing the magic of employee engagement and buy-in. When I cover these topics in a group setting, I use the analogy of a rowboat; the actively engaged employees are the ones who have their oars in the water and are rowing just as hard as they can to help the boat reach its destination. Unfortunately, the highest I’ve ever seen any employee engagement study show for these actively engaged folks has been just over 30 percent.

I don’t believe active employee engagement needs to top out there. We’ll work through the specifics of how we can each address it in our teams when we dig into that profitability killer in more detail. For now, though, I’ll challenge you to consider whether you’ve ever wholly bought into an idea or been as actively engaged as you were capable of when the person leading the team had not invested the energy to communicate effectively with you. (Hint: I know the answer!)

Poor communication can add quite a bit of fuel to the fire that’s burning up our employee engagement and buy-in. Still, it also creates confusion, and that confusion kills quite a bit of profit too…

For more on this, you're welcome to reach out to us directly at admin@dove-development.net to get a 45 Day Trial Access to our COMPLETE Leading At The Next Level program or you can check out Wes's recently released book, What's KILLING Your Profitability? (It ALL Boils Down to Leadership!) that was a #1 Best Seller on Amazon!

If we’re serious enough about capturing our best return to invest the energy into building a leadership culture that starts from the top and cascades throughout our organization, we’ll have a solid start toward achieving quantifiable results in addressing our profitability killers. And when we do, we can expect that to impact every other individual issue that’s been eating away at the profitability of our organization! The next profitability killer that deserves our focus is poor communication. More specifically, how much poor communication really costs.

In the second lesson of our Emerging Leader Development course, I share stats from Salesforce.com and SIS International Research to emphasize how significant these costs are. Instead of citing those yet again here, consider how an article I found on the Society for Human Resource Management’s website opened in making their case for what they called “A Business Rationale for the Communications Competency.” “David Grossman reported in ‘The Cost of Poor Communications’ that a survey of 400 companies with 100,000 employees each cited an average loss per company of $62.4 million per year because of inadequate communication to and between employees.” Even after working close to twenty years for a large manufacturing company, I have a hard time wrapping my head around companies that size and losses that big. Thankfully, that opening paragraph closed with an example that hit a bit closer to home: “Debra Hamilton asserted, in her article ‘Top Ten Email Blunders that Cost Companies Money,’ that miscommunication cost even smaller companies of 100 employees an average of $420,000 per year.”

Another article from BusinessWire.com in early ‘22 referenced a study done by Grammarly and Harris Pole digging into the “far-reaching impacts of poor workplace communication on U.S. businesses and employees” estimated “up to a $1.2 trillion annual loss among businesses due to ineffective communication.” As I think back to the conversation I had on a Friday evening several years ago when my friend told me he “didn’t have time for all that touchy-feely stuff; he was responsible for growing the business,” I can’t imagine he had any perspective whatsoever for losses his team was experiencing from communication alone…

Don’t misunderstand me here; I don’t believe he (or any responsible executive) would ever intentionally squander that kind of profit. But if poor communication is genuinely responsible for losses this significant and this widespread, it seems to confirm George Bernard Shaw’s suggestion that “The single biggest problem with communication is the illusion that it has taken place.”

To truly grasp the significance of this profitability killer, we need to accept that communication requires more than just saying a few words at a volume that can be heard. We need to ensure our message is received and understood to have any hope of capturing even a little bit of what’s often lost. With that in mind, let’s consider why it’s more complex than just saying something once, especially if we need our team members to take action and get results!

For more on this, you're welcome to reach out to us directly at admin@dove-development.net to get a 45 Day Trial Access to our COMPLETE Leading At The Next Level program or you can check out Wes's recently released book, What's KILLING Your Profitability? (It ALL Boils Down to Leadership!) that was a #1 Best Seller on Amazon!