Corrections or additions?
These articles by Melinda Sherwood were published in U.S. 1 Newspaper on August 11, 1999. All rights reserved.
Employee Turnover: Calculating the Costs
The notion of the “replaceable employee,” the
cog in the wheel, is officially an anachronism in today’s workplace.
For years, people have been hearing rumors about the high cost of
employee turnover, and now Kepner-Tregoe, the international research
firm at 17 Research Road in Montgomery Township, has compiled a study
quantifying those costs. Relying on detailed surveys of nearly 1,300
managers and workers, and utilizing the Turnover Costing Model developed
by the Saratoga Institute, Kepner-Tregoe has calculated that replacing
a typical information systems engineer, for example, costs a company
$34,000. Make that $40,000 to replace a mid-level manager, or nearly
$103,000 for a journeyman machinist.
In a 100-plus page monograph entitled “Avoiding the Brain Drain,”
Kepner-Tregoe gives several reasons why businesses lose big when they
lose just a single employee. A new hire, according to the study led
by Peter M. Tobia, director of Kepner-Tregoe’s Business Issues
Research Group, only works at a fraction of experienced employees.
That means loss of customers, which in effect means additional sales
expenditures to win back customers. The drain on organizational memory
and worker morale can’t be measured in numbers, but it’s a very real
phenomenon nonetheless.
Kepner-Tregoe’s survey asked managers and workers in several different
industries to make realistic assessments of several workplace issues.
Kepner-Tregoe also identified 11 companies as “retention leaders,”
companies that know how to keep their best workers. Among them: Corning,
Hallmark Cards, Johnson & Johnson, Hewlett-Packard, Motorola, Steelcase,
and Xerox.
Companies that attract and keep employees do not use financial “carrots,”
or hire roaming masseuses, either. According to the study, most people
leave a company because they don’t feel valued by the organization
or feel there is no room for advancement. Keeping your employees,
then, really comes down to basic management skills: an open dialogue
between upper management and mid management, mid-management and workers,
and investing time in your employees. Kepner Tregoe suggests companies
do the following:
Develop employee careers, not just jobs. Corporationsshould think of employees as being on a continuum — a career path– and help them meet those goals within the organization by supportingtheir performance at every point along the way. Institute uniformstandards, allocate appropriate resources, and get feedback from workers.Create a “culture of caring,” where managementand employees alike demonstrate integrity and follow ethical codesof behavior. The company should do whatever is necessary to demonstratethat employees are important — even if that means putting theirmoney where their mouth is.Develop a stair-stepping process for conflict resolution.High performers often leave jobs because of conflict with a supervisor.Create “alternate avenues” to circumvent an immediate supervisor,maintain an “open door policy,” and establish a proactiveemployee relations department.Take stock, then take action. Look at the data about differentemployee pockets — age, gender, job class, length of services,and department — to discover where problems typically occur. Thenfind a way to keep employees.Keep your eye on high performers. The stars set the tone,according to the study, for the whole business. You can tie rewardsto performance, but you should offer more than just stock options.Indulge an employee’s creative urges, for example. Offer them opportunitiesto learn more and escape from the daily grind. Hallmark Cards, oneof the retention leaders, offered creative retreats for its employees.Approach people management as a strategic business issue.Put people needs at the top of business priorities.Keep it a work in progress . Always request feedback andencourage questions.For the full report on “Avoiding the Brain Drain,” callKepner-Tregoe at 609-921-2806.– Melinda SherwoodTop Of PageRiches of EstateYou have a modest home, a 401K plan, and $300,000 inlife insurance. You don’t call yourself rich, but in fact, your estatecould be worth far beyond what you expected. “It’s not uncommonto see individuals walking around with a total estate of a millionor more,” says Scott Borsack, a partner at the law firmof Szaferman, Lakind, Blumstein, Watter & Blader PC at the QuakerbridgeExecutive Center. “No one feels wealthy at that number becausesome of it you can’t touch.”It is your inheritors who may see most of the money — very briefly,perhaps. If you write a simple will, says Borsack, who specializesin tax, trusts, and estates for the law firm, you risk losing halfof that money to taxes and court proceedings. You can learn how toplan your estate more carefully at a free seminar on Thursday, August12, at 7:30 p.m. at the Princeton Hyatt. Call 609-275-0214. The Hyattseminar will be repeated Tuesday, August 17, at 7:30 p.m. and it willbe offered Thursday, August 19, at 10:30 a.m. at the Holiday Inn,Jamesburg.A Brooklyn native, Borsack earned a BA in economics and politicalscience from Brooklyn College, Class of 1984, before receiving a lawdegree from Case Western Reserve University in Cleveland in 1987,and a masters of law and taxation from NYU School of Law in 1991.Estate law varies, says Borsack, according to the size of the estate.There are three general categories: individuals with estates under$650,000, those with estates of $650,000 to $1.3 million, and thosewhose estates exceed $1.3 million.Some commonly overlooked tricks to keeping those estates intact:The “unified credit” for federal tax purposesallows each citizen to pass $650,000 on to another free of tax. Husbandsand wives together can pass $1.3 million free of tax. “A lot ofmarried couples fail to use the credit,” says Borsack. “Theywrite a simple will that says `I chose to leave everything to my spouse,’and their failure to use the credit could cost the children hundredsof thousands of dollars.” On a $1.3 million estate, $248,000 tobe exact.Transfer the life insurance policies to a trust. “Everyoneassumes there is no estate tax paid on the death benefits of a lifeinsurance policy,” says Borsack, “but if the survivor hasn’tconsumed that balance and wants to pass it on to the next generation,they’re only going to be able to pass on 45 cents on the dollar.”Unless the money is in a trust. “Trusts don’t die, and becausethey don’t die, they don’t pay any estate taxes,” says Borsack.”On a $1 million dollar policy you can save $500,000.”Durable powers of attorney allow survivors to access moneytied up in accounts, such as a retirement account, in case you oryour spouse becomes sick and unable to govern financial affairs. Otherwise,it’s a court hearing to have the sick party declared incompetent.”But if the individual takes the time to write up a durable powerof attorney, someone could step in and access the retirement account,”says Borsack. “The cost is incredibly modest and in comparisonto the cost for a guardianship proceeding it seems almost free.”This is smart advice that even the most prudent planners oftenoverlook, says Borsack. “If you put a hundred people in a roomwho had estates between $650,000 and $1.3 million, less than fivewould know about the unified credit,” says Borsack. “Congressdoesn’t go around advertising the existence of this benefit. They’renot in the business of doing that. But we are.”– Melinda SherwoodTop Of PageTechnology’s Fast 50Shake the hands of CEOs in New Jersey’s fastest growingtechnology companies at the 1999 New Jersey Technology Fast 50 onWednesday, August 18, at 8 a.m. at the Sheraton at Woodbridge Place.More than 200 people are expected to attend the awards ceremony, whichrecognizes the state’s 50 fastest-growing technology-based companiesbased on revenue growth between 1994 and 1998. The program is sponsoredby Deloitte & Touche LLP, First Union National Bank, the Nasdaq-AmexMarket Group, New Jersey Technology Council, Regional Business Partnership,and University Heights Science Park. For more information and reservationscontact Dillon Waltner at 973-672-0120. Cost: $35.To be considered for the New Jersey Technology Fast 50, entrants hadto be headquartered in New Jersey, manufacture a technology-relatedproduct, and reap revenues of at least $50,000 in 1994. The 50 fastestgrowing companies have already been selected, but their rankings won’tbe announced until the ceremony. Many are from Central Jersey, includingAriel, CommTech, Cytogen, Hexaware Technologies, i-STAT, Medarex,MultiModal, Novasoft Information Technology, PD-LD, Sensors Unlimited,T/MAC, and Total-Tel Communications.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
