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OPERATIONAL EXCELLENCE


What Is the Cost of Workforce Turnover? Understanding the price organizations pay when they lose good employees


By Kenya McCullum A


n organization is only as strong as its workforce, but the only way that a senior living community can


have a strong workforce is by addressing its turnover of employees. It’s no secret that turnover in the industry is extremely high— with studies estimating that senior living communities can experience anywhere from 10 to 100 percent turnover rates on average—but some organizations may not understand the true ramifications that high turnover can have on their community. The effects of turnover are far-reaching and ex- pand to several parts of an organization’s business, including the following areas: Money. The most obvious effect that


turnover has on organizations is the money that is lost because of various activities they must engage in to regularly replace the peo- ple who have left. “Every time an employee leaves, you need


to not only retrain a new employee on your policy and procedures, but also train them on the standard of care you wish to provide. It takes time to learn the residents’ history and preferences that are the selling features of the community,” said John Atkinson, managing director at Willis Towers Watson. “Additional cost is incurred by overtime wages paid to existing staff and/or third-party staffing, which both outweigh the cost of an existing employee’s rate and benefits.” Unprepared management. As people leave


an organization, others are often promoted in their place. Although elevating good work- ers to management positions may be seen as an effective way to retain those employees by recognizing their hard work, it may actually have the opposite effect on overall turnover. If new managers do not receive the training they need to effectively supervise their staff, it will increase the amount of turnover among


those workers because ultimately, many peo- ple do not leave an organization—they leave a bad boss. Employee disengagement. Just as unpre-


pared management will drive people out of an organization, it will also cause increased disengagement and dissatisfaction among the employees who stay. As disengagement rises, unhappy workers will demonstrate


“Additional cost is incurred by overtime wages paid to existing staff and/or third- party staffing, which both outweigh the cost of an existing employee’s rate and benefits,” said Atkinson.


50 SENIOR LIVING EXECUTIVE SEPTEMBER/OCTOBER 2018


undesirable behaviors, such as showing up to work late, calling in sick more often, and ignoring the rules. “When people are happier, they comply


with what they are supposed to do more because they understand why it’s import- ant, so they do it,” said Jacquelyn Kung, senior care expert at Activated Insights, the research company behind Great Place to Work®. “They also see other people doing it, so they do it more. When you work in a place that’s all grumpy and then some- body tells you to do something, you’re less inclined to comply.” Innovation. When employees feel dis-


engaged, it erodes the trust they have in management. One of the byproducts of this reduced trust is that employees may not feel comfortable sharing their ideas on how to provide better care. As a result, the organization may miss out on innovation that can help them improve their processes and increase their revenue.


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