Magazine article New Zealand Management

How to Debrief and Cut the High Cost of Staff Churn: Most Organisational Knowledge Resides with People. and Staff Churn in Many New Zealand Companies Is above Danger Levels. That's a Heap of Valuable Knowledge Walking out the Door. in This, the Second of Three Articles on Using Experiential Learning, Arnold Kransdorff Explains How to Offset the Problem. (Knowledge Management)

Magazine article New Zealand Management

How to Debrief and Cut the High Cost of Staff Churn: Most Organisational Knowledge Resides with People. and Staff Churn in Many New Zealand Companies Is above Danger Levels. That's a Heap of Valuable Knowledge Walking out the Door. in This, the Second of Three Articles on Using Experiential Learning, Arnold Kransdorff Explains How to Offset the Problem. (Knowledge Management)

Article excerpt

The news that New Zealand's employee turnover is fast approaching high European levels might trigger an enthusiastic response by some industrialists. They might, for instance, believe that such flexibility delivers a correspondingly greater ability to respond to changing market conditions. But behind the apparently beneficial effect of a flexible labour market sits an iceberg-like expense that organisations should be concerned about.

Job change is very expensive. Excluding redundancy costs, the Washington-based Corporate Leadership Council estimates that direct expenses vary from 46 percent of annual pay for frontline employees to 176 percent for IT professionals and 241 percent for middle managers.

And then, there's continuous job disruption. Comprehensive research by recruitment consultants TMP Worldwide found that vast swathes of New Zealand industry have a staff churn above the internationally-recognised danger level of 15 percent a year. Against the CLC's warning that organisational"chaos" sets in when the proportion of employees annually with under one year's experience increases beyond 45 percent, companies in our tourist industry, for example, see 37 percent of their staff come and go every year.

Health, medicine and pharmacy's workforce is only slightly less itinerant with financial services, retail, advertising/marketing and IT companies seeing between 20 percent and 30 percent of their employees annually walk out of the front door. University general staff turnover is particularly high. Even the legal profession, food, government, the media and telecommunications have annual staff churns above 15 percent.

University of Southern California's professors John Carlson and Alan Rowe calculate that project performance slipped to 52 percent of optimum output when they subjected a learning cycle model to an interruption after 12 weeks over a 50-week period.

The downsides

The downside doesn't stop there. Staff churn means working groups become unstable, customer relationships are severed and the effectiveness of mentoring, job-rotation and cross-functioning teams declines as the main ways companies disseminate experiences. The other consequence--and the one with the most expensive potential price-tag--is the wholesale dispersal of an institution's expensively-acquired knowledge and experience. Call it organisational memory (OM), practice, know--how, procedure, even history, this is an asset whose value marks the unique capability of the organisation and is arguably the most important ingredient of its durability. It cannot be re-hired, with new appointees generally expected to assimilate it by osmosis--impossible if there's no one around to pass it on. With out it, new entrants must work with only the imported experiences of their earlier employers, whose way of doing things, corporate environment and market circumstances are always very different.

The result? An inability to learn from individual past experiences--and the familiar pattern of repeated mistakes, re-invented wheels and other unlearned lessons that plague companies. Institutional `forgetting' or corporate amnesia contributes massively to productivity shortfalls.

TMP's judgement is that this country's employee turnover is "way too high" while Auckland University Business School warns that even annual staff shake-ups of 10 percent will affect productivity.

Companies traditionally try to solve the problem in two ways. First they overlap selected exiting and incoming employees. Widely regarded as expensive, the transmitted knowledge divulged from this choice is normally subject to the inherent short and selective recall of the departee and the equally indistinct innate later recall of the recipient. But the most popular approach is to try and reduce staff turnover levels through incentives like higher salaries and improved working conditions.

Sovereign, the Auckland-based insurance company, has cut the turnover of its otherwise highly mobile IT staff to about 6. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.