This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

October 17, 2000

The Impacts of Labor Turnover

72 Days until January 1, 2001

Employee turnover will continue, and probably intensify as the labor market continues to tighten in the years ahead. Our forecast is that a substantial proportion of workers will change jobs every two to four years, causing serious volatility in the world of employment.

This turnover will have far-reaching impacts for employers, customers, investors, and other stakeholders. The most obvious impact will be on employers who are already suffering from broken continuity, inefficiency, and other difficulties that flow from instability in the workforce.

Numerous employers, looking more short-range than long-range, scramble to fill existing job vacancies, rather than examining their methods of doing business.

Driven by the need for "warm bodies," they hire people who are simply not qualified or even trainable to accomplish the work. As a consequence, employers are forced to invest tremendous valuable resources into building productivity and retention among employees they should not have hired in the first place.

The more competent employees soon tire of carrying the burden of the low-performers, and leave for more suitable working conditions. Result: the employer is challenged to serve customers with employees who are less than fully competent as demands for service increase. Before long, such companies are in such serious trouble that the only solution is to close the doors.

The temptation to hire with reduced standards motivates employers to stop testing for drugs, psychological suitability, honesty, and background. The increase in vulnerability is obvious. The exposure to risk for theft, violence, environmental problems, workers compensation, and other threats can rise dramatically. Faced with seemingly insurmountable odds, managers and executives will throw up their hands and leave for greener pastures. Their replacements will face a culture that will defy productivity.

Unfortunately, many employers will continue down the paths fraught with danger. Wise leaders will closely examine their missions, organizational structures, processes, and staffing. They will change the way they do business, to get things done with fewer people with different qualifications. Even the US Navy will change, staffing new ships with fewer people with higher levels of technological competence. The age of abundance of qualified workers is over.

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