The real cost of settling for average when you can be the best
Thursday, August 01, 2019
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I met with a prospect recently who asked me what the industry average was for employee turnover in high-growth companies. I responded by saying, "You want to be average? You can do much better than this. You can set the standard that others aspire to!"
Think about it. When we compare ourselves to the industry average, whether it be for sales, cost per hire, or employee turnover, we do ourselves a disservice.
Let’s say the industry average for annual sales growth is 5%, and every percentage point gained is worth $10 million of revenue for your company. Your sales team has the potential to grow the business by 8%. This means you would be leaving $30 million a year on the table if you settle for average.
I don’t know about you, but I could think of a lot of things to do with an extra $30 million a year hitting the bottom line. And that number is even higher for companies playing in bigger leagues.
I never give averages when working with clients or when I speak with prospects because standards are self-limiting. You hit the industry average, and voila, you’re golden. Everybody does the happy dance and pats one another on the back, when they should be doubling down on their efforts to do what’s working well and achieve even greater success.
So, let’s go back to the question regarding the industry average for employee turnover in high-growth companies.
Any unwanted employee turnover is too much turnover.
Look at the impact employee turnover is having on your company and your bottom line. (Use my free Employee Turnover Calculator to determine this number.)
Shocking, isn’t it?
The next step is to figure out why employees whom you’d like to keep are leaving your organization. You can try to do this yourself, although I don’t recommend you do so, as most departing employees will give you some line like, "It’s not you. It’s me." Or, "I wasn’t looking. They found me."
Consider engaging a third-party to interview employees who have recently left your firm, as this person will have a better chance of getting employees to reveal the real reason they have chosen to leave.
I’ve done enough sourcing of candidates to know that happy employees rarely take unsolicited calls from headhunters. That’s why it’s essential to check in regularly with the keepers (those whom you’d miss if they went away tomorrow) to assess their level of contentment and make modifications where necessary.
I can assure you that companies with average employee turnover do much less to prevent great people from leaving than those who are operating as if they are best in class.
If you want to be best in class, then stop settling for average. This applies to every part of your business.
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