Turnover Study

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Turnover Study

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Keeping Good Employees

Originally published in the Pennsylvania Business Central

By Douglas R. Rosensteel, CMC

“I hired six employees. One didn’t show up, and four walked off the job the first day.”

Does this local HR Director’s dilemma sound familiar? Employee turnover costs companies millions of dollars each year. Worse, keeping the wrong employees demands expensive systems to combat late arrivals and absenteeism – and they usually backfire. Problem employees play the system to maximize their time off, while good employees are punished for missing a day to care for a sick child. But Elizabeth Carbide Die Company (ECD) in McKeesport, PA, doesn’t play that game.

With 2% turnover in a region where 20% is considered good, ECD does not hire new employees only to lose them – and they don’t create systems to correct problems caused by keeping the wrong people. Instead, they use management practices that many companies consider impractical. First, they spend a lot of time finding the right people. Then they spend a lot more time communicating in an employee-friendly atmosphere that defies conventional wisdom. Jim Collins, in Good to Great[1], said great companies understand three simple truths. First, you have to get the right people. Second, if you have the right people, the problem of how to motivate them goes away. Third, if you have the wrong people, you’ll never be a great company. Sounds like ECD’s philosophy.

Wayne A. Sanderson, Vice President of ECD, believes that taking extra time to get the right people is critical. He wants, in his words, “Triple-A employees – Attitude, Aptitude, and Application.” ECD does not use temporary agencies for recruitment. Most of their candidates come from referrals, a time honored practice at ECD. Thirty-eight years ago, Sanderson was hired by the original owner, Mel Peterson, after being referred by a friend of Mr. Peterson. Today referrals come mainly from two sources – a local university’s program for machinists, and ECD’s own employees. And ECD’s employees are very selective.

“We don’t want to work with people who don’t take pride in their work,” explained machinist Eric Anderson, a 16-year ECD veteran. “The people working here are all conscientious. If I do my job right, it’s easier for the next guy to do his job. If I don’t, he’ll tell me about it.”

Communication is vital and begins early. Human Resources Manager Phil Davies explained, “It’s important to tell people the rules from the first interview. There’s a one-year probation. There is overtime and Saturdays, and if they don’t want to work overtime, they can’t work here. I tell people when they are hired, ‘If you’re gonna be late, you’ll be fired.’ And you know, we don’t have an attendance problem.”

ECD’s one year probationary period might seem excessive when most companies have a ninety day probation, but it is a significant component of their hiring strategy. Why a whole year? It takes time to match the employee to the job. According to Sanderson, “If a person can’t make it on a job, we move him to something else. I prefer to have people working on jobs they like.”

Quality Control Manager Jerry Jadlocki explained, “You’re not doing anyone a favor by keeping them on a job they can’t do. We watch new employees for 30 days to see if they look promising, and let them know how they are doing. After another 30 days, we take another look. They get a raise every two months if we see progress.”

This constant level of attention is critical. Sanderson said, “The worst thing you can do is forget about one of them. If they know you’re thinking about them, it means a whole lot more. They feel like a part of the company.”

ECD is flexible to the employees’ needs even to the extent of allowing them to leave during the shift to attend a child’s Halloween party. This is unheard of in manufacturing; conventional wisdom says productivity will suffer. ECD’s productivity proves conventional wisdom might not be so wise. Jadlocki said, “It’s unbelievably flexible here. If you need an afternoon shift instead of daylight, the foreman will try to accommodate you. I was allowed steady daylight for four months when I was on swing shift so I could coach my kid’s wrestling team.”

In a world where workers complain that management never listens, ECD’s employees tell a different story. Eric Anderson, an ECD worker, said, “Anything we say, they hear. Management is flexible to our needs. They’ll bend for us and we’ll bend for them.”

After seeing ECD in action, the answer to the employee turnover dilemma seems obvious: hire the right people, put them in jobs where they can succeed, and pay attention to them. But is this practical in a tight labor market? According to Davies, “We have people waiting in line to get in here.”

[1] HarperCollins, 2001

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