Strategies for Cutting Turnover

By Bitzer, Edward | Security Management, May 2006 | Go to article overview

Strategies for Cutting Turnover

Bitzer, Edward, Security Management

DURING THE INITIAL STAGES of its involvement in World War II, the United States faced the daunting challenge of placing millions of former civilians into military positions that fit their abilities and temperament. The U.S. Army turned to industrial/organizational psychologists (IOPs), who developed a system for measuring a person's skills and matching them to the right job. It was so effective that it remains the basis of the system in use today.

Security managers and contract guard service companies can benefit from this accumulated wealth of industrial/organizational knowledge to more accurately match job candidates to assignments that suit their interests and abilities. In so doing, they may be able to make headway against one of the industry's biggest problems: security officer turnover.

The national annual turnover rate for security guards is estimated to be between 100 and 300 percent, according to the Service Employees International Union the nation's largest private security officers union. That means that most guards leave a job within a year, and sometimes within four months.

To put that in perspective, a medium-sized security firm with enough work to employ 1,000 guards, but which suffers from a turnover rate of 150 percent, must employ about 2,500 people over the course of the year to meet its annual workload. Likewise, the same firm ends up employing guards with an average tenure of about five months--hardly enough time to develop expertise at their post before they leave and are replaced.

The consequences of this revolving door of guard personnel are numerous. For one, sending a constant parade of different guards to a customer can cause service problems or significant unease that may trigger the cancellation of, or failure to renew, the contract.

Another problem is low morale, a corollary of high turnover. Not only does morale affect performance, but professional studies have found that one of the most important security threats for organizations is disgruntled current and former employees. The more turnover a company has, the more potentially unhappy current and former staffers it has. And these malcontent security guards--who likely have keys, pass codes, and knowledge granting them access to critical areas within the client firms their employer has been hired to protect--represent a serious security vulnerability.

Then there is the direct cost to the company of continually having to replenish its work force. The U.S. Department of Labor estimates that the cost of turnover is 25 to 33 percent of the annual salary of each employee who quits, while global outsourcing and consulting firm Hewitt Associates puts the number at 150 percent.

Assuming that guards are paid $9 per hour, their yearly salary (excluding benefits) would equal roughly $18,000. Using the conservative Department of Labor cost-of-turnover estimate, it would cost a firm approximately $6,000 to replace each departing officer. A firm with 1,000 officers and 150 percent turnover would have to hire 1,500 replacement guards over the course of the year. That would cost the security guard company approximately $9 million per year--a direct hit to the bottom line.

Effective Strategies

Any firm that can keep turnover at a moderate level will have a sizeable competitive advantage over others in the industry. So what can be done?

As a consultant I have worked with a number of organizations in service-dependent industries. Many of these companies, such as retail and restaurant franchises, have many thousands of front-line employees who directly interact with customers. The difficulties these firms face in retaining their employees are very similar to the challenges inherent in keeping security officers, yet they have more favorable retention statistics.

For example, according to Nation's Restaurant News, McDonald's Corporation had turnover of "crew members" (cooks, drivethru operators, etc. …

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