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Monday, April 9, 2012

You Get What You Pay For, Again

I want to continue my thoughts from last week, along a different vain, about Nick Saban’s quote regarding his assistant coaches’ pay.  In case you missed it, here it is again:

It’s imperative that we keep continuity and we have an opportunity to be competitive salary-wise with other schools who are trying to hire our coaches,” he said. “It doesn’t really matter what my opinion is or what anyone else’s opinion is. The market is what it is, and if we’re not willing to pay that to the best people that we have, they’re not going to be here.

I’m coupling my thoughts on this quote with a visit I had with a company manager who told me their turnover rate hovers around 80%.  Yes you read that right, 80%!   And this is no small company either.  Basically, 8 out of 10 people leave their company on annual basis.  Let’s just say they employ 1000 people, this means they have to hire 800 people a year just to fill vacancies! Aren’t you glad you aren’t in HR at such a company?  Who could even keep up with the paperwork?!

I’m sure you’re guessing their wage rates lag the market.  They do, particularly given the market in which they compete for labor.   They employ individuals who have little to no marketable skills, little education and little ability to climb out of poverty at the rate they are being paid.    

What I want to emphasize here, is again, you get what you pay for, but I don’t want to neglect the realization that business circumstances dictate what you can pay in large part.   In a low margin business, it is hard to compete, and you may decide that people are a commodity as well.   This saddens me to think that individuals are viewed in this way, but some companies operate under this mentality.  If one worker leaves, they’ll find another one, one body is interchangeable with another. 

But what is the lack of continuity costing them?  I was surprised this company has a training time of about 60 days for its low-wage workforce, so the work isn’t as easy or low-skill as you make think.   There is no telling how much turnover is costing them each year.  I would venture to guess they could save money in the long run by raising their pay, or at the least examining what other incentives they could instill to keep their best longer than they do.  

What ideas can you share to lower turnover?

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