Turnover Rates

TURNOVER RATES ::

Question:

Is there a good national benchmark for healthcare turnover rates? What causes turnover and what can I do to reduce it?

Answer: No, there is not. Here is the easiest way I can describe the situation with respect to measuring turnover. Asking about a national turnover level is really a waste of time for local/regional comparative analysis.

Take the cost for the median house in the US (presently at about $208,000). The price in Bozeman MT is $290,000, $560,000 in San Diego and over $700,000 in Westchester County, NY (three places where I have lived). It is also under $70,000 in Utica and Buffalo NY. Obviously, the number you consider when you are looking for a median house price depends on where you live.

I believe that we have a similar scenario in healthcare turnover relative to the local/regional economies. Overall turnover in Saginaw, MI is 6% (local unemployment is over 9% with economic decline and poor future prospects). Overall turnover in Montgomery, AL is 20%+ (local unemployment 3.5% with high growth prospects due to the establishment of foreign automotive manufacturing). The national unemployment rate is 5% (lowest in the industrialized world with the exception of Japan).

In times of positive growth and economic development, there will be higher turnover because of increased job opportunities. Also, people will dominantly leave their employers for more pay or be “reassigned”. In times of slow growth and declining economic prospects, people will hunker down in their jobs. You are in a great area (high median price homes compared to the national averages) and a sound economy with low unemployment. Therefore, you will naturally experience higher turnover in your employee base.

As a general rule of thumb, we could say that half of your turnover rate will be caused by the economic environment and the other half by your key workforce optimization practices.

Obviously, you cannot control local economic conditions, but you can control your current workforce optimization practices. Some of the key workforce optimization practices that contribute to employee turnover are executive leadership, patient focus, and front-line leadership. Our research indicates that the caliber of front-line managers is by far the most accurate predictor of turnover. Put differently, nothing causes employees to quit or to think about quitting as the ‘department culture’ each front-line manager creates.

The average turnover of departments led by ‘A’ managers is 6.75% whereas the average turnover of departments led by ‘D’ managers is 12.15%. This is a huge difference with many ramifications, financially and otherwise!

The key is to follow the customized prescriptions we developed for each manager and the positive results will follow. The next time we create a ‘Talent Management Eye Chart’ for your organization, we will do a longitudinal comparison to determine to what degree employee engagement and turnover rates have improved in each department. As we established, the replacement cost savings for every 1% reduction in turnover is conservatively estimated to be approximately $700,000. With a 5% reduction, the cost savings could add over three million dollars to your bottom line.

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