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A warehousing and transportation company with 150 employees wants to reduce its employee turnover. The company’s turnover for the previous two years averaged 43.3%. This means they were replacing an average of 65 employees annually.
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Average employee wage cost |
$ 30,000/yr |
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Overhead expense, etc. (25%) |
$ 7,500/yr |
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Annual average labor cost |
$ 37,500/yr |
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Turnover costs (conservative est. 25%) |
$ 9,375/yr |
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Total turnover costs ($9,375 x 65) |
$609,375/yr |
When managers realized the cost of turnover was over $600,000 per year, every year – not even considering the negative impact this had on productivity – they realized that something had to be done to correct the situation.
The Solution: Two Assessment Tools
Help Hire
the Right People for the Right Jobs
Two assessments from Profiles International were added to the hiring process.
The Step One Survey II™ is a pre-employment test used to assess an applicant’s attitudes and core values regarding personal integrity, work ethic, reliability, and the likelihood of drug and/or alcohol abuse. The SOS also generates open-ended behavioral-based interview questions in specific areas of concern.
The Profile XT™ is an assessment that measures mental abilities, occupational interests, and personality traits. A sample group of current employees were tested using the Profile XT and a “Job Fit Pattern” (benchmark) was created based on the results of the company’s best employees working in that classification. Applicants taking the Profile were then compared against the “Job Fit Pattern”.
A Results-Oriented Testing Strategy
All job applicants took the SOS. This test identified people who possessed attitudes of potentially good employees. Over two years of testing, it was determined that 3.5 applicants needed to be recruited in order to find one who could be considered for employment.
The remaining applicants to be considered for employment were then given the Profile XT. Only those applicants who matched the Profile XT “Job Fit Pattern" at 75% fit or greater were interviewed using the open-ended, behavioral-based questions generated by the Profile XT. Roughly one out of two applicants did well enough to be considered for employment.
In summary, for each position filled it required seven applicants to be recruited and tested with the SOS, in order to find two applicants who were tested with the Profile XT, in order to identify the one “best qualified” applicant who was then hired.
Reduced Turnover Results in Dramatic Cost Savings
Following the start of testing, 61 replacement employees were hired in the first year, 34 in the second year and 16 employees in the third year. Employee turnover was reduced to 10.7%, a reduction in turnover of 75%.
On average over three years, 84 fewer employees turned over. (Previous average of 65 x 3 years = 195 employees. 195 –- 111 actual hires = 84 fewer new hires).
The 84 employees who didn't turn over saved the company $787,500 (84 times $9,375). Considering the added cost of the testing, this was still a huge return on investment.
Reducing Turnover Results in Improved Employee Productivity
The company also kept track of its productivity during this three-year period. Productivity was measured by the number of pounds moved per person per month.
Before testing, the workforce of 150 employees averaged 826,000 pounds per employee per month. After two years, the same number of employees was averaging 1,020,000 pounds per employee per month, a 23.5% improvement in productivity.
For more information on these companies and other references, please contact Business Insight Technologies.
Your organization can reduce employee turnover and improve productivity, too. Contact us today to schedule a complimentary consultation to discover what your return on investment could be.
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Business Insight Technologies
11004 141st St Ct E
Puyallup, WA 98374
Phone: 253-604-4141
Email:
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