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The Obsolescence of Turnover Rate and The More Relevant Rate of Worker Return

(Wordcount: 1,194; Pages: 3) Business periodicals are filled with stories about the funk that our economy has just gotten out of. As a result, companies are back to hiring, fighting mightily for the newest, best (and not always cheaper) talent. What happened to all that great talent they had before, that they had to lay off en masse during the "Great Funk"? Why couldn't they be recalled, along with their new experiences and fresh focus on the company? Unlike machines, workers are in fact more than capable of having a fresh perspective on the same work, but since companies don't know how to utilize their service workers efficiently anyway, this "fire-old, hire-new" cycle continues to contribute to the pointless fascination with turnover rates and number of employees. And it is this cycle that also prevents many HR executives from recognizing and using a better number for organizational strength: the rate of worker return.

Understanding the Cost Impact of Rate of Worker Return

The rate of worker return isn't just a corporate barometer, but a better way to manage the costs traditionally associated with recruitment, hiring, training, and exiting. First and foremost, assuming that the door is always open to alumni, recruitment is as easy as a "blast" announcement to the entire pool of alumni (which, if done via email, makes recruitment supremely cheap). Consequently, recruiters never experience the sort of competitive bidding for talent that typically emerges during heavy recruitment cycles. The returning lot is then introduced to the new assignment, with minimal training, since they're already familiar with the culture and other standard operating procedures.

Recruiting and training fresh workers falls on the shoulders of returning workers. It isn't an additional duty, but a natural consequence of feeling welcome and appreciated at the recalling company. Positive buzz works the same way inside of the company as it does outside, and returning workers will enthusiastically introduce new workers the "cool" way you "do things around here".

At the conclusion of their tenure, workers aren't fired, deferred, or permitted to quit (with some exceptions). They merely take some time off or deactivate until such time when they are needed again. If that time comes and they do not return, they may also refer other workers to the company. (The company, as presented in our groundbreaking report on HR, "Fixing HR" (1), may proceed to function as an outplacement service to assist and guide deactivated workers in their ongoing career choices.)

In the European Union, where the unemployment rate is typically double that of the U.S. (2), part-time employment across various industries, anathema just a few years ago, is the strongest source of employment in a traditionally anti-employer labor market. In fact, between 12-30% of all workers across the Union today are part-time workers, unprecedented in a market known to make firing workers nearly impossible.

And despite the protests by younger workers against changing labor laws in countries like France, in a recent NYTimes.com article, workers were cited as preferring the temp system as it gives them a flexibility they had never experienced (3).

Rate of Worker Return as a Corporate Barometer

As a barometer, the rate of worker return is a testament to how much the company values their workers; demonstrates that the company has a very clear picture of their entire staffing needs and can fill all staffing needs on demand with skills and ideas that are relevant at any point in time; and maintains a more flexible financial structure when it comes to the cost of this HR model.

More significantly, it gives upper management a superior gauge of employee sentiment about the overall health and attractiveness of an organization, similar to how consumer feedback mechanisms work. Ultimately, if no one wants to work for the company, something's wrong.

Implementing an HR model that tracks rate of worker return is also a superior way to adjust your business to changing economic needs without upsetting morale and performance since workers recognize churn as a healthy part of the organization and look forward to taking time off to unwind, recharge, and refocus prior to returning to another objective that will fully utilize their skills and knowledge.

A cyclical model that can always find a role for a worker as their own skill sets evolve doesn't provide guaranteed, indefinite employment. Yet the traditional linear HR model arrogantly assumes that all workers seek such guaranteed, indefinite employment (a mentality that adds to the instigation of headcount as the top metric an organization offers to the public as evidence of their strength). After all, why should the company be the only one that adjusts and right-sizes to economic shifts? Workers make the same economic transitions and if they could, they'd use these changes as their excuse to fire their employers as well, but for their utter dependence on that linear HR model while they're part of it.

Rate of Worker Return Metrics

In an internal execution of our proposed cyclical HR model, we've experienced rates of worker return averaging 9%-to-10%, with the potential to surpass 30% with shorter intervals between assignments and a smoother reintegration process.

With an average of 3 hours of training necessary per task to be completed per each new worker at a cost of roughly $200/hour (if the trainer were part of the senior executive team), that's a savings of several thousand dollars per project/engagement since returning workers don't have to be retrained.

Returning workers then went on to recruit and train additional new workers at an astounding maximum ratio of 1:10. Because of their enthusiasm and relationships with recruited candidates, and the lower cost of training associated with subordinates training new workers, that's another several thousand dollars saved in both recruitment and training costs per project/engagement.

In casual discussions with workers who didn't return, we've discovered that workers prefer to do less meaningful work elsewhere rather than experience the unfamiliar nature of a cyclical model. But of the 9%-to-10% who returned, a third left other part-time work, confident that when they've completed their short-term employment with their recalling employer, their skill levels will be greater and they would easily transition across industries and/or functions. In other words, they experienced no intrinsic risks from integrating themselves into this model.

What Rate of Worker Return Means for Retention

Employee retention methods, as they exist today, would yield greater results if they taught employers how to reduce workload per worker, minimize dependence on single workers or groups of workers, and demonstrated the financial benefits of allowing workers to leave the organization - without pay - and return at a mutually convenience point in time.

The practice of keeping workers performing at the same level doing the same work indefinitely is irrational. It's like your wife asking you to mow your lawn and when you're done, to do it again. She'll give you incentives like extra TV time or your favorite dish for supper. But your enthusiasm will wane until you finally decide to cement over your lawn. Before your workers become so dissatisfied that their work is equivalent to mowing their lawns, consider recognizing that they're humans, not machines, and like all humans, change and diversity are critical to productivity and growth.


(1) Fixing HR: An Economic Analysis of 30 Thought Leaders' Best Practices + Detailed Blueprint for the New Economy

(2) Olivier J. Blanchard, Explaining European Unemployment

(3) John Tagliabue, 4 Hours a Day, 3 Days a Week (Subscription required)

Al Berrios is Managing Director of al berrios & co., an innovative strategy consulting firm advising leaders on the impact of human behavior on their strategies and on how to change their organizations to address the behavior. Write to Consumer Strategies Report at editor @ alberrios.com.


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