A friend of mine recently took over as HR Director of a company with a large call centre operation. She was shocked to see the staff turnover rate in this part of the business was over 100% per annum. That effectively means that on average every single worker left during the year. However, what really appalled her was that the call centre managers didn't see this as a big problem. Bums on seat was all that mattered and as long as they met their statistical targets, all was fine.
XpertHR have just published their annual survey of staff turnover. According to their research the median voluntary resignation rate in the UK was 7.9% in 2011. Or put another way an average of one employee in 11 (9.3%) resigned from their job during that calendar year. The highest resignation rates in the economy were experienced by private-sector-services employers: 11%, compared with 5.7% in manufacturing and production and 6.7% in the public sector. They argue that the considerably higher level of voluntary worker departures in private-sector services probably reflects the greater buoyancy in the labour market in this section of the economy and cuts in public services make workers there less likely to move. Overall, the median total labour turnover rate for 2011 stood at 13.2% and the average at 15.6%. Regional variations have been narrowing and Scotland is mid table at present.
So, back to my HR Director. Sadly, I was not surprised that her call centre managers didn't see this as a problem. The industry does suffer from what I have described as "spreadsheet managers". By that I mean a focus on statistics rather than people management. I recall doing a meeting of call centre workers across Glasgow where the workers could clearly recognise this management approach. They often moved jobs, not for better pay or conditions, but because of the way they were treated. For this reason call centre turnover has always been higher than average, typically 25% or higher. One survey calculated 60% of call centre workers in the UK will leave their job within two years.
Employers rarely fully understand the cost of an employee departure. The 2012 CIPD survey found that the estimated cost per hire is £8,000 for senior managers and £2,500 for other staff. There are also other potential knock-on effects when a member of staff leaves their job, such as overtime costs for other staff covering the post, temporary staff fees and indirect costs such as missed business opportunities. £6000 is therefore a more realistic cost figure. In this context the cost of 100% turnover rates is astronomic. It is estimated that turnover in the call centre industry costs £2bn per year.
Some management gurus argue that higher turnover will be the norm as we adopt portfolio careers. However, they have been arguing this for many years yet the proportion of employees in the national workforce with long periods of service (10 years or more) has remained broadly the same.
The reasons for high turnover can be complex, but they are almost always capable of being tackled. My advice to my friend was to find out why by asking the workers concerned. I suspect she will find that pay and conditions will only be part of the problem. The available research shows that the most important factor associated with intention to quit is job satisfaction. It is followed by a cluster of factors, including the presence of a high-quality workplace, the state of the psychological contract, satisfaction with work-life balance, effective supervisory leadership and excitement in the job. All of these factors are commonly found in poorly managed call centres.
The good news is that better management and creative job design can make a big difference. The result is better performance and a big saving to the organisation. Needless to say these positive factors are more likely to be present in unionised workplaces. I have been involved in programmes that have reduced turnover to single figure percentages. The simple trick is to stop treating workers like battery hens.